SALESFORCEAUTOMATIONATFANMILKLIMITED

This case has been written by Dr. Margaret Crabbe,

Ghana Institute of Management and Public Administration,
assisted by Samuel Asante of Fan Milk Limited. The case
is intended to be used as a basis for class discussion rather than
to illustrate the effectiveness or otherwise of a management situation.
The case was made possible by the cooperation of the Managing Director
of Fan Milk Limited, Ghana.
The case was compiled from a primary source at Fan Milk Limited.


2012.Nopartofthispublicationmaybecopied,storedtransmitted,reproducedordistributed
inanyformormediumwithoutthepermissionofthecopyrightowner

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Sales force automation at Fan Milk Limited
By Dr. Margaret Crabbe
GIMPA Business School
In 2007, Fan Milk Limited introduced sales force automation (SFA) into its sales operations
to import efficiency and reliability in its sales and production decisions. With barely all of its
raw materials imported, the last thing the company needed was inefficient sales and debtors
records. But that is what the company contended with using the manual system of recording
sales. With the introduction of the SFA, Fan Milk Limited became one of the first in Ghana
to have applied Internet technology to a hand-held device in sales operations. Sales of the
companys products by vans was recorded in real time at the companys back office and this
helped in keeping track of inflows, project its production levels, and be able to arrange for
payments of its imported raw materials. The SFA failed to yield the expected results seven
months after its take off, as sales officers reports of malfunctioning of the system escalated
day after day of its use. The van sales officers showed great preference for the manual system
of operation. Whiles analysts and professionals are wondering what must have gone wrong
with the implementation program and whether management should reintroduce the system,
van sales officers have reverted to the manual invoice entry system.

Keywords: sales force, officers, automation, Fan Milk Limited













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Sales force automation at Fan Milk Limited


Fan Milk Limited (FML) is a leading producer of Ice Cream and Yoghurt in Ghana. Its
product line includes Fanyogo, Fanice, Fanchoco, Tampico Fruit Drink and Ice Lollies
(FanPop). Incorporated in 1960 as Ghana Milk Company by a group of Scandinavian
investors basically to produce milk to complement the protein requirements of the people of
Ghana, the company has grown from producing pasteurized milk into a multi-million cedi
company with revenue of GHS 82.5 million and a net profit after tax of GHS 15 million as at
end 2009.
At its inception, a miscalculation on the part of Erik Emborg, one of the founder, and a
Danish entrepreneur to introduce recombined pasteurized milk in tetrapak cartons to the
Ghanaian market failed miserably. A research revealed later that Ghanaians favored tinned
milk with caramelized taste imported primarily from Holland. Distribution of the product,
which was mostly done by itinerant vendors who rode old-fashioned container-carry bicycles
popularly described as Long John Bicycles to schools, shops, departmental stores, homes
and hospitals, did not also do well at the time. The market analysis had been wrong. People
were just not buying the fresh milk products because using fresh milk was not the habit of
Ghanaians. Ghana Milk Company Limited lost its entire equity and, by 1962 had gone
bankrupt. The nominal capital registered against Ghana Milk Company as at 1st January,
1960 was 30,000 Ghanaian Pounds(G), made up of 30,000 ordinary shares of G1,00 each.

Reengineering at Ghana Milk Company

In March, 1962 the Company underwent two significant changes. Firstly, its name was
changed to Fan Milk Limited, and secondly the product portfolio was widened to include ice
cream, yoghurt and ice lollies. In 1969, the Company became a Public Limited Liability
company. In a space of 18 months when the company transformed from producing
pasteurized milk into producing chocolate milk, ice cream and yoghurt, Fan Milk Limited felt
the wind of real prosperity blowing around it. The company repaid its bank loan without a
problem, paid its employees handsomely and acquired a fleet of bicycles to intensify its
distribution network. On 2nd September, 1969, the shareholders passed a resolution to
convert the company to a public limited liability company and increase authorized shares
from 30,000 to 470,000.
Fan Milk Limited (FML) continued bouncing in the Ghanaian market until it began facing
difficulties in the 1980s, as a result of a global oil crisis which culminated in rising fuel costs.
{Notice that Fan Milk Limited distributes all its products in vans to retailers}. The company
was however, one of the first foreign companies to be listed on the Ghana Stock Exchange in
1990. Despite the intermittent periods of difficulties, the company currently has a total shares
of about 19,784,548, having its earnings per share increased to GhS 770 in 2009 compared to
GhS 360 in 2008 (Stock Exchange Report, 2009).
The Company, in 2007 provided direct employment to 450 individuals and indirect
employment to another 10,000 individuals (agents and their vendors, push cart vendors and
bicycle vendors). Van Sales Officers constituted 10 percent of sales force of the companys
permanent employees- a total of 46 at the time. Fan Milk Limited has created a nationwide
presence through an intricate network of strategically located distribution outlets to make
their products accessible to all Ghanaians. The company distributes all its products directly to
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its customers through its Sales operations which include Depots, Van Sales Operations and
Regional Depot Operations (combination of Depots and Van Sales Operations). The
production department is centered only in the Greater Accra region and distribution of its
products to other regional capitals is done through the operations of vans. The company now
uses information systems to track all its trucks and vans activities from collection to
destination.

Threats of competition?

Fan Milk Limited imports substantial amount of its raw materials, and has had no major
competitor in Ghana for a very long time. Over the years the company has enjoyed a
seemingly monopoly in the production and distribution of ice cream and yoghurt. Even
though there were relatively smaller companies producing ice cream and yoghurt at pubs,
hotels and restaurant such as Bus Stop restaurant, Frankies, Ambassador Hotel and other
companies that produced Lolies, Poki ice cream etc, were no match to Fan Milk Limited.
There are now, also a few number of small scale enterprises scattered especially in Accra,
Kumasi, and Cape Coast. These small-scale enterprises mainly process fresh local fruits such
as pineapple, mango and oranges into juices.
Quite recently, a few enterprises that have emerged are producing liquid yoghurt in bottles
such as the Yomi yoghurt, and these seem to be going well with Ghanaians especially
individuals who have lived abroad and tasted similar types of yoghurt.
The food and beverage sector of Ghana employs about 10,000 individuals directly and
20,000 individuals indirectly. The manufacturing component of the sector is mainly
dominated by multinationals such as Nestle Ghana Limited, Coca-Cola Bottling Company of
Ghana Limited, Unilever Ghana Limited, Guinness Ghana Brewery Limited and Accra
brewery with distinctive product lines. Some of the few local companies present in the sector
are Kasapreko Company Limited and GIHOC distilleries which produce mainly alcoholic
beverages.
The company depends largely on imported inputs for its production and turnaround time for
its capital is of great importance to the continued production of the companys products,
hence the need to promote efficiency in the distribution and sale of its products, especially in
the collection of proceed. Since van sales contribute 80 percent of total sales of the company,
management became concerned about lapses in the flow of cash from van sales activities.
The sales activities of van sale officers have a major impact in the achievement of sales target
for the company. In addition, prompt results of sales captured immediately could foster
production discussions.




VAN SALES OPERATIONS

Van Sales refers to the sales carried out by Sales Officers of Fan Milk Limited via
individually allocated trucks loaded with company products. Van sales are regarded as
warehousing in the companys books, and the chunk of the distribution of Fan Milk products
to customers are done mainly from depots in the countrys capital cities by vans. The trucks
are usually loaded with various products produced by the company (driven by company
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drivers) from Head Office, Tema, Kumasi and Takoradi Regional offices to sell to various
distribution channels (agents, fuel station shops, schools, hotels and supermarkets).
The sales activities of Van Sales officers were done manually through the issuance of
manual invoices to customers. A total of about 45 entries were made by the sales officer
manually for each customer he sold to, in order to issue an invoice. These entries are re-
entered on a spreadsheet at the end of a days sales. Van Sales Officers have offices with a
number of computers on a network, and share one or more networked printers. In addition,
inputs made by sales officers are cross checked and validated by supervisors to ensure their
authentication, avoid errors, replications and, also, to verify credit sales from customers. The
processes to collate all the sales activities of each individual Sales Officer into the
Companys main accounts was characterized by delays and uncertainties due to errors
especially where credit facilities are utilized by customers. Credit facilities are given to
customers who apply for such facilities so they could delay payment for specify number of
days. Damages due to packaging defects of the products are also recorded in the invoices.

Exhibit 1: Fan Milk Limited Vans
Van Sales Automation
In order for the company to keep daily track of sales, credit positions and damages recorded,
was necessary to keep pace with the growing market, automation of these activities was
inevitable. In 2006, the Management of Fan Milk Limited tasked the IT manager to do a
feasibility study to automate the sales activities of van sales officers so as to increase
efficiency in the sales and records systems. The search for the technology that could be used
for the automation process was an arduous task for the IT department. An initial effort was
made as a short-term measure to introduce a hand-held computing device, a palm treo with a
Web access to automate the sales processes. These hand-held devices got mutilated by the
sales force in a spate of a couple of months blaming non-durability of the device. The
salesmen obviously, needed a more durable, customized Wi-Fi handheld mobile device
combining computing and communications technologies.
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Fan Milk Limited Management decided to adopt the automation of the sales force by the use
of handheld PC to live up to its vision to be a progressive, responsible and innovative world-
class food company engaged in the production and marketing of nutritious and refreshing
products of the highest international quality. A local software company, PERSOL Systems
Limited was contracted in 2007 to design and implement Sales Force Automation (SFA)
software for Van Sale officers of Fan Milk Limited. The project plan included job
responsibilities for all departmental managers and staff of relevant departments, time lines
and specific budgetary allocations. Extensive internet search on global companies that have
successfully applied the Sales Force Automation enabled the IT manager and the consultant
to settle on the appropriate hardware and software necessary to assist the project to take off.
The criteria used to select the hardware included reliability, performance, cost, connectivity
and compatibility.
The SFA was designed to use the Archer Field PC which is waterproof and dustproof to IP67
with Bluetooth package, 64 megabits of random access memory (RAM), 128 MB flash read
only memory (ROM), 3.5 display, an orange body mould and a barcode scanner. The PC run
on a Windows Mobile 5.0, an Intel X-Scale PXA 270, 520MHz processor. The PC was
complemented by Extech S2500 THS Portable Bluetooth Receipt Printer.
The PC presented the user with an initial screen for user name and password. Upon a
successful login, various options are presented, which consisted of Journey Plan, Invoice,
Payment, Customer Setup, Utilities and Synchronization menu. The Journey Plan enabled the
Sales Officer to plan sales to his customers. The Invoice had functions such as sales invoice,
voiding of sales, refund invoice and reprint of invoice. The Payment menu allowed payment
by Credit customers to be made. Customer Setup enabled the addition of new customers. The
Utilities menu presented options for initial stock taking, find out remaining stock, find past
transactions and sales details. The synchronization menu enabled the Sales Officer to
synchronize with the back office application whenever new orders were made and after close
of sales.


Exhibit 4: Handheld PC
The objectives of the Sales Force Automation (SFA) among others were to:
1. Automate the manual sales
2. Automatically synchronize sales into main back office application
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3. Enable Finance and Accounts to better monitor the sales operations
4. Reduce the amount of duplication work in the various Van Sales operations
5. Make the calculation of monthly customers Cash Discount faster and streamlined
6. Reduce the time taken to send reconciled figures to Head Office at the end of each month

Prior to the SFA Implementation

The total number of Sales Force Officers at Fan Milk Limited numbered 46 at the time the
automation process started in 2007 but only twenty of them that operated from the head
office were used for the pilot project. The trial automation project was limited to headquarters
sales officers for the purpose of ensuring that effective implementation at limited costs was
achieved before extending its use to the regional offices. Twenty van sales officers were used
for the trial implementation of the sales force automation.
In order to design the software to meet the needs of Fan Milk Limited and achieve its ob
jectives, the consultants organized a series of meetings with management, staff of the
Accounting, Marketing, Production, Technology departments and Van sales officers to
ascertain the information needs of each individual prospective user and constituency of the
company. Other meetings were arranged to sensitize the prospective end users of the
technology. This included van sales officers and their supervisors. A seven-day intensive
training was also organized for the van sales officers to familiarize themselves with the use of
the new technology and to impart to them the benefits of the device to their operations and
the company at large. A period of about six months was used for the design and
implementation of the Sales Force Automation.
The number of trials and the days allocated for the training of the van sales officers was
deemed good by the consultant since the use of personal computers was commonplace at Fan
Milk Limited, and the fact that these Sales officers were well educated, and also had prior
experience in the use of similar device earlier in the year. At Fan Milk Limited, employees
are trained to use computers since personnel matters and communication in and around the
company are usually computer-based. Such practice is also to affirm the companys objective
and vision to go green and keep the environment clean.
The policy of Fan Milk Limited to limit paper-based transactions and adopt mechanically
operated production measures leading to efficiency has culminated in extensive use of
computers in its operations. Capital expenses thus form a chunk of its expenditure. In 2009
for instance, capital expenditure in production and sales (a total of GhS 2.2 million)
accounted for about 15 percent of total revenue. Production equipments bought during the
year included a Gram freezer for ice cream production, a Tank farm with automated valve
station, a turbo mixer, a microbiological equipment, sales vans and distribution trucks.
Distribution costs increased from GhS 12.6 million in 2008 to GhS 18.6 million in 2009, an
increase of 32 percent. In 2009 distribution costs represented 23 percent of revenue. The
increase in distribution costs by all intent and purpose should match increases in cash and
revenue, and reduction in receivables and inventory. An initial cost of USD 65,000 was also
estimated (during the feasibility study) for the sales force automation project (excluding cost
of wages, technology such as corporate PCs etc). This was made up of:

Costs of handheld device = USD 40,000

Consultants fees = USD 15,000

Cost of Training = USD 10,000
Total USD 65,000
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THE IMPLEMENTATION

The training of the Vans Sales Officers was conducted by a subcommittee comprising three
employees from the IT department and two employees of the Software developer, Persol
Systems Limited. One employee of Persol Systems Limited was permanently assigned to the
project for the purpose of assisting in the training and implementation of the system. An
intensive training was conducted for an hour daily for one week for all the participating Sales
Officers and the back office staff.
The phased-out testing of the SFA was done both in-house and on the field. The van sales
officers acquainted themselves with the device and tested in all dimensions to ascertain the
robustness of the device and its ability to provide the necessary efficiency in their activities.
A complete assessment and readiness of the sales force were required before the final
approval for its use was given. Sample data entry display screens, reports and a manual
containing a step-by-step procedure of the use of the device and possible problem that could
arise, and ways that those problems could be solved were given to each van sale officer on
the project. Notices which indicated the steps to do various activities were also pasted on the
shelves of the sales officers to serve as a guide and to remind them about the working processes
of the Sales Force Automation.
The three staff from the IT department and one permanent staff from the software developer
were stationed at the offices of the Van Sales department during the live takeoff of the project
implementation. Their main function was to offer immediate support online to any Sales
Officer who had any difficulty in doing any task on the device whiles on the field. The task
involved pre departure task, sales activities and post sales activities. The pre departure task
involved downloading additional products requested during the day into the handheld device.
The sales activities task involved the actual selling of the product to the various channel
outlets. The post sales activities included downloading sales activities into the back office
application and printing a copy of total trading activities for the day.
The telephone numbers of the software support staff, IT staff and IT Manager were also
given to the Sales Officers to enable them call for assistance as and when the need arose.
The Outcome

While the device was said to have increased the officers self esteem and confidence amidst
applause from customers and onlookers of the professionalism associated with the usage of
the device, some new developments regarding the use of the device was yet to be uncovered.
A couple of weeks into its usage, the sales officers had started complaining that the device
had an inherent problem of freezing while input was being made to it on the job. Sales
officers were again, taken through the processes to avoid the repetition of the problem. In
many of the cases reported, sales officers would revert to using manual invoices to record
sales. Technical officers were then assigned to the sales officers to study circumstances
leading to the PC freezing and to ensure that the problem was dealt with at once. The
problem, as was often reported by the sales officers, never repeated itself - as long as the IT
officers accompanied the van sales officers to the field, the SFA PC functioned normally.
There are a few questions to answer. Was it the case of being cautious in using the device
when they are being monitored? Or was it a case of chance that whenever the technical team
was on the field with the sales officers, the pre-departure settings were properly configured so
as to avoid freezing of the systems? Answers to these and many more are yet to be provided
either by the technical team or the sales officers. It was however, obvious that the sales
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officers were conversant with the manual recording of their activities and preferred the
manual to the automated recording of every detail of the transactions with each customer,
which were automatically transmitted into the companys servers. In the manual recordings
ample time was usually allocated for the sales officers to straighten their records before
handling over to the back office.
Was the failure of the SFA an issue of conflicting interest? Were errors being recorded
especially with credit sales deliberate? Did the sales officers have a different notion of the
motive of Management in introducing the SFA? Was the failure preempted? Or, was it an
affirmation of the notion that in information system development, whether acquired or
implemented system, even when technically sound with specifications met, implementation
may still meet with resistance or rejection by the users or corporate management (Yeo, 2002).
An indebt interview with some of the van officers however, confirmed that the automation
system was unable to withstand the volume of data required for a good daily sales thus the
resultant freezing of the automated system.
Some sales officers were eventually found to have recorded sales transactions into the PC
after the days sales were over as the PC revealed the time that the sales information were
recorded.
Other problems reported on the handset device by the van sales officers included the
smallness of the screen, damage of the serial port, and the inability of the device to print. The
use of SFA was halted after seven months. According to Sauer (1993) systems should be
considered as a failure only if there is a development or operation termination.
Expressing his opinion (in retrospect) on the failure of the SFA to achieve the objective for
which it was designed, Mr. Samuel Asante, the Technology Manager of Fan Milk Limited
conceded that the major problem was with the testing. Testing the device the wrong way
rather than what they were instructed to do, would have made us realized all the flaws that
could be encountered with the device and these flaws would have been taken care of while
the consultant was still on the project. This would also have made the device more robust
than it was. The computer would have crashed if the storage capacity was exceeded, and the
anomaly reverted immediately.
According to the Sales and Marketing Manager of the company, Mr. Kwasi Attuah, the
failure of the SFA was as a result of technical hitches in the operation of the SFA and the
inability of the IT team to respond urgently to calls from the operators. He noted that it took
about a week for the IT department to get the vendor to correct errors on the device and this
hampered the operations of the van sale officers.

Case study questions

1. What implementation issues does this case raise? Would you agree with the van sale
officers that the screen was too small? Would you have used the SFA if you were a
van sales officer of the company? Give reasons.

2. What do you think are the main reasons for the failure? Do you realize a conflict of
interests between Fan Milk Management objectives and that of the sales men?

3. Do you accept the IT Managers submission that the testing of SFA was the main
issue with the implementation? What testing process would you recommend to Fan
Milk Limited should they decide to reintroduce SFA?



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This case has been assisted by Mr. Samuel Asante,
the IT Manager of Fan Milk Limited and a former student
of GIMPA.

REFERENCES
Sauer, C; (1993) Why Information Systems Fail: A case study approach Information
systems series. Henley-on-Thames, UK. Alfred Walker.

Yeo. K. T., (2002) Critical failure in information systems projects International Journal of
Project Management, 20, 241-246.

www.fanmilk-gh.net

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APPENDIX