138 Cmkovic, Petkovic, & Janicijevic

Chapter IX

Reengineering the
Selling Process in a
Showroom
Jakov Cmkovic State University of New
York at Albany, USA
Goran Petkovic University of
Belgrade, Yugoslavia
Nebojsa Janicijevic University of
Belgrade, Yugoslavia

ABSTRACT
The case presented chronicles the reengineering efforts of a small
Yugoslavian showroom wholesaler. Following an initial period of success,
the company subsequently became unable to deliver the promised level of
quality and service. A team of consultants was engaged who recommended
business-process reengineering in order to help improve performance. The
strategy they devised for the company involved replacing functional
specialists with case managers. While the strategy was successfully
implemented, it was not followed by appropriate changes in information
technology, thus limiting the effectiveness of the entire process. The goals
of this case are threefold. The authors seek: (1) to help the reader
understand the current situation; (2) to develop a swift fix strategy; (3) to
outline tactical and strategic plans for future development.Readers will be
able to review several working prototypes' of information subsystems
designed to support the suggested reengineering process.

Reengineering the Selling Process in a Showroom

139

BACKGROUND
The background of this case is the rapidly changing business
environment in Yugoslavia 2 during the period of transition towards a
(relatively) free market economy. Recent changes in the business
environment have led to new opportunities for individual investment and
real possibilities for entrepreneurship.
We hope that this case will be of interest to a variety of readers, not
only because of renewed interest in the region, ? but also because the
company discussed in it is a small wholesaler operating in the showroom
business setting. There are many similar organizations all over the world,
particularly in Eastern Europe and the Far East. By increasing export-import
revenues, these relatively small enterprises are helping the global
economy become truly global.
The case describes Wissol, a Yugoslavian company that has continued
growing despite turbulence in both the economy and the geographical
region. The case describes several aspects of the firm, ranging from
organizational structure, human resources and information systems to
warehousing, local (onsite) and situational logistics, transportation and
distribution.

Yugoslavian Trade (1990-2001)

The legacy of a planned, centralized economy, along with
hyperinflation and a huge economic crisis during the 1990s help account
for the obsolete structure of Yugoslavian trade. Small companies
predominate and their number is exceedingly large in wholesaling. Thus, in
1994, there was a 3:1 ratio between the number of wholesalers and
retailers. Yet, the total sales volume in wholesaling was only 1.6 times
greater than in retailing. Small wholesalers do not have sufficient market
power, adequate sales and warehousing capacities or satisfactory
professional knowledge of trade. However, in the newly opened private
sector, market laws have started to work and competition has greatly
increased. New companies seek to become dominant in smaller
geographical areas or in more specialized consumer goods markets
("niches").
The most interesting situation that can be observed is in the packaged
food and consumer goods market. Companies in these markets base their
business on showroom sales and are amongst the most important types of
wholesalers. Globally, these companies are reminiscent of the catalogue
and showroom retailers that, together with discount houses, hindered the
development of traditional department stores over the last 50 years. 4
However, there are several key characteristics that distinguish these
merchants from wholesalers and showroom retailers in developed markets.
The following characteristics should also be taken into account in order to
more fully understand the context and the problems new wholesalers face
during periods of abrupt growth:
New wholesalers have small capacities. They do not pursue the real
cash and carry
trade since they lack sufficient space for both supplies and the free
traffic of buyers.

The showroom represents a breakthrough solution and involves a

smaller facility
for exhibited samples. Buyers select merchandise on the basis of
exhibited samples
while the logistics department collects the ordered goods and
prepares them for
delivery.
Unlike retailers, wholesalers do not go to the expense of printing
catalogs.

140 Cmkovic, Petkovic, & Janicijevic

A showroom usually contains a sales department. The

salespersons provide information to customers, help them with
their order forms or even fill out the order forms themselves.
Aside from the salespersons, there are two more types of
functional specialists involved in order processing: administrative
clerks who prepare the documentation and logistics clerks who
prepare an order for delivery.
Unlike their Western European counterparts, showroom
merchants in Yugoslavia may assume the additional basic
functions of a distributor. In the beginning, this happens on an
ad hoc basis; in time, however, constant transportation lines are
established. There is only a rudimentary level of specialized
delivery for local markets (expensive and often unreliable). 5
Government-owned post offices are traditionally inefficient and
do not deliver bigger parcels door-to-door. Foreign companies like
UPS, FEDEX and DHL charge high tariffs and will only take parcels
designated for export.
A phone ordering system is being developed in order to better
serve repeat customers. This happened spontaneously at first; it
was later formalized when certain salespersons were appointed
to receive telephone orders. The idea of phone ordering,
however, is not well established amongst the general
population; a good, inexpensive 800-number system is lacking.
The Yugoslavian market has also been characterized by
shortages of selected merchandise due to economic sanctions.
As a consequence, demand overheated when articles became
available. Since the import/export business was so limited, there
was ample room for the black market and "gray" economy.
The banking system has also had serious problems. All credits and
even credit-card purchases were virtually eliminated during the
early nineties, but started to resurface by the end of the decade.
Diversification develops in the course of performing additional
ancillary functions. Certain wholesalers finance production or
retailing. Others offer to arrange merchandise in retailers'
facilities. Distributors for foreign companies enter into joint
promotional activities or gather and distribute market
information.6

The increasing number and strength of small, independent

retailers and catering services primarily accounts for the increase in
showroom wholesalers. Showroom wholesalers in Yugoslavia cater to
buyers who would typically be served by cash-and-carry merchants in
more developed economies. The share of small and independent
retailers is likely to remain significant, at least for a time. 7 Evidence
from Western Europe suggests that small merchants and catering
services will represent an important market for the emerging
showroom merchants in Yugoslavia during the next stage of economic
development.

SETTING THE STAGE

Big Problems for Small Wholesalers

Local merchants, organized by territories,8 dominate the
distribution channels. The four most significant types of merchants
are:
.

Reengineering the Selling Process in a Showroom

141

Table 1. The major competitors in the packaged food wholesaling in

Yugoslavia
Data for I-VI 1997

C-MARKET
PEKABETA
ROD1C M&B
DELTA
IMPEX-PROMET
WISSOL
JUGOSECER
D1SKOMERC
GRANEXPORT
VRBAS

Index
Goods
turnove
483.219 5.27
310.10
7
257.90
3
120,55

9
104.87
9
91,697
81,38
6
74.29
8
63,19
7
61.51
6

3.38
2.81
1.31
1.14
1.00
0.89
0.81
0.69
0.67

The data are

expressed in
thousands
Profit
Net of Yu-dinars
Total
Total
Number
worth
assets
turnove
of
r 493,849
37 198,296 378.738 3.227.2
1
311,04
148 274,779 342.654 1,727.7
7
6
259,54 1,895
26,235 146.659
923.30
1
120,93 4.534 21 ,11 7 196,335
279.24
1
105,37
8
92,95
1
81.46
4
74,48
7
91,01
5
61.51
6

1626
2,038
-822
1138
800
24

Type of activity
Retailing and wholesaling
Retailing and wholesaling
Wholesaling and production
Wholesaling

15,435

42,032

66.00 Retailing and wholesaling

2,765

36,109

51.00 Wholesaling and production

27.044 100,030
9,009

30.323

98.33') 164.786
33.467

59,219

35.39 Wholesaling
86.49 Retailing and wholesaling
458.7
9
309.5
0

Wholesaling
Wholesaling

Wholesalers: mostly specialized in determined commodity groups.

Retailers: local supermarket chains which, in turn, supply local
merchants. General merchandise wholesalers: these mostly use
showrooms as the point-of-sale; they frequently play the role of
producers for tax motives, or of retailers in order to gather cash more
promptly. Wissol belongs to this group. Producers: those who sell
their own goods and the goods they receive as a compensation 9 for
their products.

The Wissol Company is privately owned and has been in business

since 1993. It leases space for a showroom, offices and warehouses (a
typical choice for showroom businesses around the globe). In 1997, Wissol
had 51 regular employees and around 80 part-time employees, most of
whom worked in the warehouse, performing simple, manipulative tasks. By
the beginning of 2001, Wissol had more than 155 employees, making it
one of the top competitors in the Yugoslav packaged food market. Table 1
lists some of these competitors, a small number of which achieve higher
sales volume than Wissol.
When the firm was created, it was organized along the lines of a retail
showroom company. There are many businesses in which the showroom
model is very popular, including: jewelry showrooms, car salons (very
popular overseas, gaining popularity in the U.S.) and specialized shops for
home/office remodeling (e.g., "plumbing showrooms"). The showroom
model has also become increasingly popular in the wholesale sector and on
the WWW. Some of the more widely known retail showroom chains like
"Service Merchandise" or Luria's, are currently going through a
restructuring process. Luria's, one of Florida's leading catalog showroom
retailers, is shifting its format from showrooms to special discount stores,
specifically "superstores". It is even discontinuing its annual catalog a
major symbol of the retail showroom business.
Wissol adopted a functional means of unit grouping on the basis of
work assignment andjob similarity, resulting in the following business
functions: purchasing; sales; warehousing; arranging; administration;
finance and accounting. The functional model of unit grouping perfectly
corresponds to Wissol's age, size and business concept in the present

stage of its lifecycle. Yet, its organizational structure, presented in Figure I,

must be altered in order to eliminate a number of intractable problems.
.

Figure 1. Wissol's organizational chart

WISSOL General
manager
Support stuff Man
ager

Commercial department CEO

Finance and accounting

d epa rtm en t
Manager

W h olesale Man
ag er
Sales department Sales
manager

-c

Wholesale clerk
Account receivable clerk
Discount book clerk

Invoice clerk
Showroom operator

Pu rch asing
Purchasing manager

Purchasing clerk
Accou n tan t

W arehou se
Warehouse manager
Assistan t
Administrative clerk
Collector
Con troler
Store keeper
Fo r k l i ft d river
Transportation worker

Wissol's information systems operate at the transaction processing

level and incorporate key elements of management information systems
(more or less typical for small, new companies). The accounting system
appears to be somewhat better developed than other systems, particularly
in marketing and decision-making. Complete IS support is outsourced. Note
that the IS functions are not mentioned in Figure 1 even though, with the
current level of design, they should fit under the Finance and Accounting
department heading.
Wissol's sales method is based on selecting goods and filling orders in
the showroom. The typical buyer is either a caterer or a small retailer
whose store area varies from 500 up to 5,000 sq. feet (known in the U.S. as
"convenience stores"). Using bar codes and quantities, Wissol's
administrative personnel prepare and print invoices and delivery lists in the
showroom. The documents are then transferred to the warehouse where
the buyer must collect the goods. The collected merchandise is then
loaded into the buyer's vehicle (not always the same day) or shipped by a
company truck when deliveries are scheduled in the buver's neighborhood.
If clients can count on prompt delivery, they may also decide to use
the added convenience of telephone ordering. Employees in the sales
department receive buyers' orders by phone, oversee the preparation of
delivery lists and invoices by administrative personnel and transfer the
documents to the warehouse. This procedure is identical to the one used in
the showroom. The only difference is that the goods must be loaded in
Wissol trucks and transported to buyers (transportation is partially
outsourced).
Aside from the showrooms, Wissol also sells its merchandise through
sales representatives (outside or "field" sales). This especially applies to
selected imported merchandise. Wissol sells on a much larger territory
than showrooms' gravitational area. Figure 2 presents Wissol's
fundamental business processes. Our research focuses on showroom sales

("inside sales" in Figure 2) yet, at this point it should be emphasized that.

.

Reengineering the Selling Process in a Showroom

143

Figure 2. Fundamental processes in the firm

Fundamental
Buying ShowWarehouse
Sales repprocesses
room
resentativ
X
X
1.Stock and
assortment
X
X
2. Showroom
selling (inside
3. Outside sales
X
X
Support processes
Human resource management
Financial flows management
Information flows management

Transport
X
X
X

due to active growth in the first and in the third business processes, the
pace of showroom sales is slowing down.

CASE DESCRIPTION
Initial Challenges Facing the Firm
During Wissol's first few years in business, the growth of its sales
volume was dramatic. The convenience of selling through showrooms
(areas over 3,000 sq. feet), together with a well-balanced assortment of
merchandise (around 6,000 SKUs). favorable prices, a delivery service and
a phone-ordering system garnered Wissol popularity among small
merchants. After their initial success, however, the firm was not able to
maintain the level of service promised at the start; it was not able to keep
up with its own success.
The owner (and general manager) decided to engage two consultants
from Belgrade's Business School Research Institute. 10 Their initial diagnosis
(problem assessment) was based on the vast difference between
organizational models for retail and wholesale showroom businesses; other
problems stemmed from the very rudimentary level of information
technology support. The suggested cure was a general reengineering of
the organization and of the information flow. Following a case presentation
at the Institute, research began on a complete redesign of Wissol's
business and information systems.
The increase in sales volume caused some additional organizational
difficulties. The impact of these was most strongly felt in the showroom and
the warehouses. The showroom receives documentation for both standard
customer orders and phone orders simultaneously. The temporal
concentration of orders in busy periods posed a special problem.
Additionally, enhanced buying followed enhanced sales and the storage of
goods became more complicated and time-consuming. The same
warehouse workers, using the same in and out doors and corridors, filled
invoices and stored goods; they were organized into two shifts whose hours
overlapped substantially.
The workers were assigned to designated warehouses. The goods are
sorted by origin and content and are stored in the following warehouses:

chemical goods; dry

.

Figure 3. Showroom selling process (primary design as firm started). Note:

Employee title in bold
CUSTOMER
ENTERS THE
SHOWROOM
9

DELIVERY Controller
and Driver

THE CUSTOMER
CONTACTRS THE
SALESPERSON
Salesperson in
the showroom

to
CO
Q O
O
OJ> 2
w
o

i
I

SELECTING THE
MERCHANDISE &
WRITING ORDER
Showroom
salesperson

TRANSFERING THE
ORDER TO THE
INVOICE
DEPARTMENT
Showroom
salesperson

i
INVOICE AND
DELIVERY LIST
FULFILLING
Administrative
clerk

TRANSPORTATION
Controller and
Driver

LOADING
THE
INVOICED
MERCHANDISE Collector/
Store keeper/ Controller
CONTROLLING THE
MERCHANDISE
Controller

WARE
WARE
HOUSE 1

o
X

u
>
o
y

>
u
CO

COLLECTING THE
INVOICED
MERCHANDISE

o f

Collector
/
Store keeper

a1

WARE
HOUSE 4
COLLECTING THE
INVOICED
MERCHANDISE

Collector /
Store
keeper
HOUSES 2
and 3
COLLECTING THE
INVOICED
MERCHANDISE

Collector /
Store keeper

DOCUMENTS
CARRYING TO THE
WAREHOUSE
Administrative
clerk

RECEIPT AND DISTRIBUTION

OF THE DELIVERY LISTS TO
THE RESPECTIVE WAREHOUSE
PARTS Warehouse manager

packaged goods; beverages; frozen goods. Each warehouse manager

controls his own crew and is responsible for the supplies in his warehouse.
The warehouses became incapable of processing the received orders.
This was especially dangerous because clients in the showroom or in front
of the warehouses waited longer than they had previously. The time needed
for invoice printing and merchandise collection doubled. The basic
operations (i.e., showroom and warehouse activities) are presented in
Figure 3.
Certain errors or problems with documents can be catastrophic; they
can cause both clients and employees to wait nervously and needlessly. In

fact, if an error occurs or the merchandise listed in the invoice is out of

stock (for whatever reason), the buyer is forced to return to the showroom
and repeat the same series of actions.

These arrangements caused personnel to expend a maximum amount

of effort." A great deal of work (e.g.. shifting documents from one
department to another) and a weak preventive in case of error caused jams
in client processing.12 The most serious problems were:
Unorganized reception of customers in the showroom: customers
enter the showroom by themselves and a salesperson "chases" after
them. An accounts receivable clerk, meanwhile, "chases" debtors. On
occasion, administrative personnel are in the process of printing out
an invoice when the accounts receivable clerk intervenes. As a result,
the salesperson is "blocked," serving a debtor whose order cannot be
processed.
Customers who come alone and order goods in a showroom generally
stay there too long. They spend most of the time waiting to collect
their invoices; they then proceed to the warehouse.
Telephone orders (customer should have previously ordered or be able
to describe needs, since there are no catalogs) are very timeconsuming for salespersons. Irritated customers are left waiting while
salespersons walk from shelf to shelf, receiving orders from absentee
buyers.
Problems connected with ordering out-of-stock merchandise are
particularly bad. Customers frequently fill out orders for goods on
display in the showroom but missing from the warehouse; this
indicates bad coordination. A customer that receives a printed invoice
for nonexistent merchandise must repeat the entire process; naturally,
this provokes a great deal of dissatisfaction. Sometimes, products are
coded incorrectly customers or sellers write down the erroneous
product code in the showroom. The wrong goods are collected and, if
the customer does not want them, the invoice must be destroyed and
the transaction must start all over again.
There are no catalogs. Even customers who know exactly what they
want have to complete order forms in the showroom, instead of
completing forms in advance. Problems occur when insolvent
customers try to place an order. There is neither organized collection
nor delivery of goods. Delivery is held up while the customer waits
needlessly in the warehouse.
There is neither central ized, uniform logistics management nor
adequate transportation management. Since transport is not
organized in the logistics department, logistics costs and transport
duration are both greatly increased.
The most serious problems stem from the fact that the selling process
involves far too many specialized organizational components. In each
business function there is a tendency to conclude a determined part of the
job concerning one client, to perform it entirely and then to transfer the
subject to the next functional specialist. Administrative clerks in the
showroom tend to conclude the selling process and the preparation of

documents, after which the client proceeds to the warehouse. The current
sequence of steps can cause difficulties not only during the selection of
goods but even after delivery. There is an inefficient division of labor
between salespersons and those responsible for invoices in the showroom.
The reverse arrows, labeled with the letter P (for Problem) shown in Figure
3, illustrate this problem: they indicate that a customer must start all over
again if an error is found in the documents.
.

To accelerate the traffic of clients through the showroom, customer

solvency checks are performed simultaneously (indicated by the arrow and
letter S in Figure 3). Ideally, however, these should be sequential rather
than competitive actions. The consequences of the present system are lost
time for salespersons and embarrassing public scenes in the showroom.
An additional difficulty is caused by diversification, e.g., performing
new functions in a distribution channel (transportation for customers).
Such growth could overwhelm an already burdened logistics department
and result in greater confusion and delay.
Each organizational sector has attempted to solve these problems by
itself. As Figure 3 indicates they are all active participants in a unique order
preparation process. Yet, there is no one person clearly designated to
oversee account processing from start to finish, which causes additional
delays for irate customers.

Suggested Steps Towards A Solution: Reengineering

Merely restructuring or reorganizing the showroom or warehouse could
not have solved the problems beleaguering Wissol; broader functional
changes were needed. Those changes could have been achieved either by
rationalizing the order preparation and fulfillment process or by process
reengineering. From the IS point of view, there were obvious basic
problems in the area of inventory management and with the client
database, HR and transportation system management.
In order to survive, small Yugoslav wholesalers must learn how to
achieve a tenable competitive advantage over rivals. Business process
reengineering is a viable solution since it enables companies to achieve a
competitive edge by working from a process organizational perspective.
A majority of authors agree that, under turbulent conditions, a
company achieves sustainable competitive advantage in the market by
developing superior processes, not structures. A company can be
understood as a network of processes. Each process, in turn, can be seen
as a sequence of activities that transform input into output. By adopting
this view, Wissol was able to change its organizational perspective from
function to process-oriented. This change was a part of a broader shift of
the organizational paradigm from "strategy-structure-systems" to
"purpose-processes-people." This was not, however, the end of
reengineering at Wissol.
The radical redesign of business processes also implies changing the
fundamental assumptions upon which these processes are based.
Assumptions are made about the goal of the process, its users and the
technology destined to be used in the process. The inefficiency of business
processes frequently stems from the fact that they are based on obsolete
assumptions, which must be identified and altered before meaningful
changes can be made. Since organizational culture consists of many such
assumptions, changing organizational culture becomes an integral part of
the reengineering process.
Alterations in the content and course of activities and operations may
thus cause changes not only to individual jobs but to the whole
organizational structure as well. The organizational structure is adapted by
creating organizational units that comprehend the entire business process,
not just selected steps. Although it often endangers the achieved level of

specialization, the advantages of structuring on the basis of processes are

manifold. We might also add that motivation tends to improve when
employees' tasks become more varied, complex and, as a result, more
satisfying.
.

Reengineering the Selling Process in a Showroom

147

Changes in business processes will not be possible without changes in

the planning and control system, in the performance measurement system
and, most importantly, in information systems. Information systems play
an enabling role in reengineering; they directly influence the assumptions
upon which business processes are built.
The reengineering process at Wissol followed the program of changes
proposed by the authors'3 and based on existing literature in the field of
reengineering. The process consists of eight steps and one additional
proviso, viz., that the process must be closely managed from start to finish.
Steps 1 and 2 are: Start from the top and Get the strategy right. Step 3 is:
Identify core business processes. At Wissol, reengineering was initiated to
help improve the ORDER PREPARATION AND FULFILLMENT PROCESS. It was
designed on the basis of around 10 basic assumptions (defined in Step 3), a
majority of which were proven to be false in Steps 4 and 5. The following
are examples of these assumptions:
It is neither necessary nor possible to contact customers the moment they
enter the showroom.
The customer solvency check is a "shameful
thing" and should be performed without their knowledge.
A customer cannot select goods and prepare an order by
himself/herself; a salesperson must do it for him/her. 14
The salesperson receiving an order by phone must first locate the
merchandise, and then read its code.
Step 4: Develop deep process knowledge. The basic assumptions
noted in Step 3 led to serious problems in order preparation and fulfillment.
Among the more severe were:
The customer solvency check is performed simultaneously rather than
sequentially (after the sales process). The solvency check is not
always performed very discreetly.15
Salespersons are very busy because they must prepare the entire
order for each customer; customers must try to "catch" a salesperson.
Salespersons walk around the showroom with headsets in order to
read the code; they waste time and irritate customers waiting for their
orders to be prepared.16
Step 5: Identify opportunities for improvement. Recommendations on
how to do this are outlined below. Please compare these with the
assumptions identified in Step 3 and the observations made in Step 4.
The process of recognizing customers upon entrance to the showroom
can be very
short.
The solvency check is a regular and legitimate act, which can be
performed in an unobtrusive
way.
A customer is capable of selecting merchandise and preparing an
order form
himself/herself (with the assistance of a salesperson only if
necessary).

Salespersons can prepare a phone order simply by checking the stock

list on the
computer screen and without seeing the product on the shelf. 17

148 Crnkovic, Petkovic, & Janicijevic

Figure 4. Reengineered business
1. Buyers'
reception and
the solvency
check
Showroo
m
manager

5. Collecting
the
merchandise
by
specification
Logistic
crew

2. Selecting
the goods
and order
preparation
Salesperso
n

3. Preparing
an invoice
and
transferring
it to the
warehouse
Salesperso
n

6. Printing
the final
invoice and
solving the
problems
Logistic
manager

4. Preparing
the
merchandise
delivery lists
in certain
warehouses
Logistic
manager

7. Loading
and
transportati
on ofthe
merchandis
e
Logistic
crew

Customers can prepare an order ahead of time and come to the

showroom to have it processed and picked up. Otherwise, they can
order over the phone.
Based on these steps, a new process of order preparation and
fulfillment is designed (Figure 4.)
This leads us to Step 6: Identify world-class best-of-breed and customer
requirements. Readers are invited to expand on these ideas, particularly
from the IS/IT point of view.
1.

2.

Buyers' reception and the solvency check. Upon entry, the showroom
manager greets buyers and directs them towards an unoccupied sales
representative in the showroom. In this way, the sales manager acts
as a host in the Wissol showroom; he/she is the first point of contact
for buyers. The showroom manager also performs solvency checks (in
cooperation with an accounts receivable clerk) and intervenes when
necessary.18
Selecting the goods and order preparation. This activity is performed
in three possible ways: by phone, 19 using previously prepared
catalogs20 and directly in the showroom.
2.1 Orders received by phone are taken by the "sitting" salesperson at
whose disposal is a computer containing the stock price list and
product codes; he/she does not walk around the showroom.
He/she sends the prepared invoice by computer to the
11
logistics manager in the warehouse. Buyers who know
exactly what they want can be offered previously prepared
forms. Buyers complete the forms before they come to the
Wissol showroom. When they arrive, they immediately give the

2.3

forms to a "sitting" sales representative 21 for processing.

Most orders involve a direct selection of merchandise in the
showroom. For this type of ordering, automatic code scanning
with a laser gun could be

Reengineering the Selling Process in a Showroom

3.

4.

5.

6.

7.

149

introduced. When a customer comes to Wissol, he or she

receives a laser gun to decode the merchandise while walking
around the showroom. By pressing a button on the device, the
customer scans the code of the desired goods, writes down the
quantity on a bar code device and, thus, prepares an order
automatically. In an unobtrusive way, salespersons accompany
buyers while they stroll around the showroom, offering help in
handling the laser guns and providing information about the
merchandise. If a buyer does not want or cannot manage the
laser gun, a salesperson handles it for him/her.
Preparing an invoice and transferring it to the warehouse.
Salespersons still prepare the initial invoices 22 yet these are no longer
printed in the showroom. They are sent electronically to the central
warehouse to the logistics manager's terminal. The logistics
manager phones (or sends an instant-message) to the showroom
when the merchandise is ready for pick-up.
Preparing the merchandise delivery lists in certain warehouses. On
the basis of invoices, delivery lists are prepared and printed in a
specific warehouse. The logistics manager or his assistant performs
this function. Warehouse workers (controllers, collectors and
transportation workers) are organized into three-member teams and
not into warehouses.23
Collecting the merchandise by specification. The warehouse work
teams go from one warehouse to another and collect the merchandise
specified in the invoice. Once the client's merchandise has been
collected, the team leader reports to the logistics manager to discuss
problems or necessary improvements, e.g., changes to the current
invoice.
Printing the final invoice and resolving eventual disputes. When the
merchandise has been collected, the logistics manager prints the final
invoice and delivers it to the buyer. If any error has occurred, the
logistics manager will proceed to the showroom to resolve the
problem with the customer.
Loading and transportation of the merchandise. The logistics manager
entrusts the transportation manager with the loading and
transportation of goods after the final invoice is delivered to the buyer.
If the buyer transports his own merchandise, the transportation
manager organizes the loading of goods into the buyer's vehicle;
otherwise, transportation will take place according to schedule.

The next two steps of the reengineering process will be discussed

together in the next section. They are Step 7: Create a new process design
and Step 8: Implement the new process; they are currently being
implemented (late 2000).

CURRENT CHALLENGES
The redesign of order preparation and fulfillment was built upon
completely new assumptions; this meant that changes in the:
a.

Organizational structure, and

b.

Improvements in company's IS were also necessary.

150 Crnkovic, Petkovic, & Janicijevic

Reengineering the order preparation and fulfillment process at Wissol

necessitated certain changes in the organizational structure of the
company. The most significant changes in structure and job design were:

Creating the new position of showroom receptionist.

Drawing up separate job descriptions (and training requirements) for
"sitting" (in
front of a terminal or PC) and mobile salespersons.
Appointing logistics and transportation managers capable of
overseeing the entire goods collection and transportation processes.
Changing the job description of warehouse workers: instead of being
specialists (controllers, collectors, carriers) they become universal
workers, organized by teams rather than warehouses and given more
flexible hours.
Eliminating warehouse managers' responsibility for the collection and
delivery of
merchandise; they are responsible only for organizing, receiving 24 and
keeping
goods in the warehouse.
Architecturally restructuring warehouses in order to form three
separate zones in each: reception, warehousing and delivery zones.

As a result of these changes, Wissol's organizational structure moved

closer towards the process model; positions of authority and control in
management were established. The showroom manager oversees the order
preparation process in the showroom while the logistics manager controls
the entire order fulfillment process. Furthermore, by creating logistics
teams, the entire process of merchandise collection is streamlined and
rationalized.
Wissol management, with the help of the reengineering team, was
able to help employees abandon those assumptions identified as a source
of problems. The first step was to make employees aware of these
assumptions; since most of them were subconscious or implicit, they could
not be changed until they were first exposed and acknowledged to be
problematic. In the meantime, alternative ideas consistent with envisioned
changes in corporate culture were proffered. The corporation's new vision
of order preparation and fulfillment was successfully communicated to
employees who accepted the new assumptions upon which the redesigned
process was based.
The most challenging step was in building IS support. It should have
been established during the initial stages, but it was not. The complete IS
sector is outsourced, including maintaining the existing applications and
systems development. Currently, Wissol has more than 40 networked PCs
(using Novel 4.1 Network Operating System); the majority of programs run
the DOS database package Clipper (with very limited networking options).
Maintenance and small improvements are added on a daily basis. The
software company is aware that, given Wissol's current technology, they
cannot improve Wissol's information system. They suggested that Wissol
switch to Oracle (yet even the software company in charge is not quite
ready for this step and they wanted to use this job as a test case). This
would require a major overhaul of the company's hardware but significant

improvements in IS support would certainly result. Unfortunately, the

owner has not given his blessing; he mistakenly believes that IS cannot be
profitable. His assumption is based on a typical return on investment (ROI)
perspective and an inability to understand intangible benefits. He further
doubted the software

Reengineering the Selling Process in a Showroom

151

company's ability to install Oracle (for the first time ever) at Wissol. With this
case, the authors are trying to help in solving this problem by building a
prototype of a comprehensive IS (in Access, Java or VB) which, if properly
designed, could help persuade the CEO. The system can be demonstrated in
the local area network environment.
The next logical step, after placing a good inventory and accounting
system on the local area network, will be to add selected options for
implementation on the Internet. Typically, it will start by building a Web page
covering basic marketing ideas. Another approach would be to build a new IS
system using the intranet, which would be useful if the company decided to
go into e-commerce. Strategic decision-makers think this a likely possibility.
Yet, based on the current level of infrastructure, they expect Wissol to enter
into B2B endeavors with vendors and foreign partners, before getting into ebusiness with local customers. The wholesale firm provides a great model for
developing e-commerce B2B applications.

FURTHER READING
Armistead C, & Rowland, P. (1996). Managing business process. New York:
John Wiley
&Sons. Bowersox, D.J., & Cooper, M.B. (1992). Strategic marketing
channel management. New
York: McGraw Hill. Crnkovic, J. (1999). EIS building blocks in e-business. In
Strategic issues in transformation of big companies in the global
environment (pp. 33-40). Belgrade: NICEF
Press. Crnkovic, J., Holstein, W., & Mohan, L. (1998). Designing EIS:
Three cases from retailing.
In Management and marketing in the global environment(pp. 391-406).
Belgrade:
NICEF Press. Crnkovic, J., & Holstein, W.K. (1995). Information systems:
Necessity or luxury in
changing economies. Journal of Information Sys terns, 5, 119-135.
Crnkovic, J., & Petkovic, G. (1998). New trends in retailing: E-commerce. Nova
Trgovina,
5(9(1-2), 1-16. De Looff, L. A.( 1997). Information systems outsourcing
decision making: a managerial
approach. Hershey, PA: Idea Group Publishing. Gaston, S.J. (1997),
Getting the right systems at the right price. New York: John Wiley
&Sons. Holstein, W.K., & Crnkovic, J. (1999). EIS design issues: The
special case of e-commerce.
In IRMA, 10'h International Conference Proceedings. Hershey, PA: Idea
Group
Publishing Johannessen, J., Olsen, B., & Olaisen, J. (1997). Organizing for
innovation. Long Range
Planing, 30(1) Kalakota, R., & Whinston, A.B. (Eds.). (1997). Readings in
electronic commerce.
Reading, MA: Addison Wesley. Knights, D., & Willmott, H. (Eds.). (2000).
The reengineering revolution?: Critical
studies of corporate change. London: SAGE. Maddison, R., & Darnton, G.
(1996). Information systems in organizations: Improving

business processes. London; New York: Chapman & Hall.

Mason, J.B., Mayer, M.L., & Ezell, H.F. (1991). Retailing, 4/E. Homewood, IL:
Irwin. Pearlson, K.E. (2001). Managing and using information systems. New
York: John Willey
& Sons. Tilanus, B. (Ed.). (1997). Information systems in logistics and
transportation. Tarrytown,
NY: Pergamon. Whalen, T., & Wright, D. (1999). Business process
reengineering for the use of distance
learning at Bell Canada. Annals of Cases on information technology:
Applications
and management in organizations (Vol. 1). Hershey, PA: Idea Group
Publishing.

ACKNOWLEDGMENTS
After selecting several good IS prototypes designed by our students,
there is a special thanks for putting extra efforts to improve their initial
solutions to: Irena Khachatryan, Adam Rubin, Rachelle Freedman, Kim
Goldberg, Inderjit Kaur and Mike Dixon.
The authors would also like to thank Mehdi Khosrow-Pour (ACIT senior
editor) and the review panel for their insight and helpful suggestions.

ENDNOTES
Over 100 juniors at the School of Business, University at Albany New
York (SUN Y), working in groups, have developed 23 prototypes in
Microsoft Access. Three of them are improved and are available to
readers who adopt the Case. According to the laws and business
practices of the former socialist Yugoslavia, ownership of small retail
shops, small job-shops, farms, restaurants, etc. was permitted only if
the number of employees was five or fewer (not counting members of
the immediate family). A true market economy first became possible
in the mid-1980s and Yugoslavia was poised to become one of the
leading new economies in the region. After a promising start, progress
was halted because of erroneous political decisions, which resulted in
war and the imposition of international sanctions. Though the
economy has been devastated, there are still entrepreneurs with
interesting ideas, modest investments and vision. The company
discussed in this case was established in 1993. The consultancy team
was formed in 1997 and worked well into 2000. After recent elections
(October 2000), it was expected that Yugoslavia would be reintegrated
into international (e.g., UN, MMF) and regional (European)
organizations.
We are presenting this case in 2001, now that there is a chance for
lasting peace along with renewed interest in investment and
development in the region. Berman. B., & Evans J.R. (1995). Retail
management. Englewood Cliffs, NJ: Prentice Hall.
The authors suggested this type of business expansion plan to the
Yugoslavian Railway system in 1998, but management declined.
Yugoslavian Airlines has door-to-door service, but companies like
Wissol do not need air transport to cover small geographical areas.

Sanctions are lifted and more import (and eventually export) activities
are anticipated.
.

Reengineering the Selling Process in a Showroom

153

Dawson, J. (1998). Trade and competition orientated developments in

the EEA. In B. Maricic, & G. Petkovic (Eds.), Management and
marketing challenges in global environment. Belgrade, Yu: NICEF
Press.
We can estimate the area of gravity for Wissol to be around 5,000
square miles A compensation business exists because of high inflation
or when a firm's financial assets are frozen; goods are traded between
companies rather than sold on the market. This idea is based on
barter arrangements in foreign exchange (made by mutual
agreement), but on a domestic level, companies frequently end up
with unwanted merchandise or even spare parts. The general premise
is that it is better to get something rather than nothing, but the
companies affected are not the ones making the decisions. Typically,
compensation schemes are endorsed by politicians relying on
justifications like: "the common good'" or " higher interests". In the
same time, Wissol's owner was the main source of information for the
consultants. In addition, researchers visited the company many times,
received documentation and conducted interviews with employees
prior to and during the re-engineering process. Business cooperation
between the owner and the Institute had two peak points. The first
was in 1997-98, when researchers from the Institute performed
systems analysis and designed the reengineering process, which was
implemented in 1998. IS was not implemented at that time. After two
years (beginning of 2000), Wissol called back the consultants and
decided to focus on IS and information technology. This second call
was the main reason why the authors wanted to share the case with
readers of this Journal. There is very high unemployment across
Europe, particularly in Yugoslavia. There is a tendency to keep any job
(to go the "extra mile" if needed) and to learn the business (to pick-up
"tricks") in order to be able to go into business for oneself (particularly
in the service industry).
During one of the authors' visits to the company, they spotted one
very busy person making calls and working at a desk in the showroom
for several hours. When asked who this efficient employee was, the
manager answered that this person was not an employee, but an
unhappy customer making business calls while waiting for his order to
be straightened out.
See Hammer, M., & Champy, J. (1993). Reengineering the corporation.
London: Nicholas Brealey. And Hammer, M. & Stanton, S. (1995). The
reengineering revolution. London: HarperCollins.
The existence of an IS/IT model (at the level of transaction processing)
is assumed. Ideally, this should be done prior to filling an order (good
IS must exist). Please compare this assumption to the current practice
of any retail or wholesale showroom in your area. If the firm's IS has
the MIS or DSS level.
Several other options are available. If there is a waiting line,

operations management theory proves that using one line (users wait
for the first available salesperson, with or without being issued
"serving numbers") instead of multiple lines is more efficient. If there
is a good IS and the customer feels comfortable using it, he/ she can
make an initial invoice on the terminal provided (security issues must
be resolved in advance). Possible expansion to e-business.

23

24

There are various opinions about printing catalogs. They are

expensive because
they have a very limited life span. Wissol sells approximately 6,000
articles and has
around 1,500 customers. They will need to print at least 2,000
catalogs and the cost
of doing so will not be trivial. Making on-line catalogs is a better
solution, but it
is a serious programming and data entry task. In discussion with the
consultants,
Wissol's owner made an interesting point; given the current market
situation, it
may not be advisable to advertise that you actually have "hard to find
articles" in
stock.
The showroom receptionist or manager should be able to help to
expedite this
process.
Customer data should be automatically added onto the invoice after
retrieval from
the Customer's table (i f a good database system is in place).
A similar retail practice is used at Sears (USA), making the waiting
time for pick
up less than a minute.
If supported by good IS, it should not be a problem.

Jakov (Yasha) Crnkovic (yasha@albany.edu) is an associate professor of

management science and information systems at the Business School,
State University of New York at Albany, New York. He received PhD, MS and
BS degrees from the University of Belgrade, Yugoslavia, with additional
studies in Switzerland and Great Britain. His major research interests are in
decision support systems, system simulation and in IS/ IT education. He
published more than a dozen textbooks, over 60 journal and conference
papers, and participated in many research and consulting projects in the
area of IS/IT applications for various businesses and for governmental
organizations in Yugoslavia and the U.S.
Goran Petkovic (pego@eunet.yu) is an associate professor, Faculty of
Economics, University in Belgrade, Yugoslavia. He received PhD, MS and
BS degrees from the University of Belgrade, with post-doc studies in Great
Britain and France. His research interests are in the areas of decisionmaking, marketing and management the firms in the trade industry,
strategic marketing and human resources information systems. He
authored or co-authored seven books and over 20 journal and conference

papers. His consulting activities include marketing, management and

organization of retail, wholesale and production companies in Yugoslavia.
Nebojsa Janicijevic is an associate professor, Department of Management,
Faculty of Economics, University of Belgrade, Yugoslavia. He received PhD,
MS and BS degrees from the University of Belgrade, with additional studies
in Boston. His research interests are in the areas of organization and
management, entrepreneurship and human resources. He authored or coauthored several books and many journal and conference papers. His
consulting activities include organization, management and HRM for many
companies in Yugoslavia.