Case Study on "Batesville Casket Company"

Case Study 6 pages (1644 words) Sources: 5

[EXCERPT] . . . .

Batesville Casket Company -- Case Study

One of the key challenges in today's competitive business climate is the management of technological innovation in line with sales, marketing, and customer service goals. Batesville Casket Company is a successful subsidiary of a larger company that is the largest producer globally of metal and hardwood burial caskets, and has the lion's share of the market for such products in the United States. In North America alone, Batesville serves more than 16,000 funeral homes and has 66 strategically located distribution warehouses (Customer Service Centers, or CSRs) spaced in geographically appropriate locations. The parent company, Hillenbrand Industries, has shown some remarkable fiscal growth, and Batesville, while not the largest contributor to Hillenbrand, is consistently growing as shown to the right.

Indeed, Batesville shows a healthier operating profit than the other Hillenbrand subsidiaries, and is a substantial contributor to Hillenbrand's profits -- the only one showing consistent positive growth, and actually poised to be the top fiscal contributor to the company, having already surpassed the 1990 contribution from the Health Care field.

Core Issues -- Batesville has an extremely robust and strategic MIS Department, under the direction of James Kuisel, who has been director of that department for over 14 years. The department has evolved during the computing revolution, and during the period in question focused on moving applications from bulky mainframes to a more svelt and customer oriented client server networking scenario. As the personal computer industry has changed, so has the need for a different way to view manufacturing and delivery options. Too, the funeral home business is exceedingly personal, combined with the nature of the industry in not requiring inventory until needed (usually a few days between family visit and burial). This has required a considered effort to attempt to line production, inventory management, distribution, and customer satisfaction with the tastes of several thousand clients. In addition, as Kuisel explained, software solutions for such an endeavor are expensive and complex, "there are only a few mainframe suppliers who have developed highly complex systems that cost and arm and a leg" (Marin, 1992).

This business is a quintessential example of a situation in which it is difficult to adequately predict and prepare for distribution. Partially due to the fact that there are a great deal of SKUs, partially due to individual and geographic tastes, and partially due to the unavoidable fact that in the funeral business there is typically not the luxury of long-term inventory planning on the part of the end user .Instead, Batesville must utilize a combination of qualitative (what they hear from the field) and quantitative (what was purchased where in the past) to predict how to stock certain distribution centers. For example, CSR Chicago might have a profile that includes a certain mix of caskets, while CSR Seattle a completely different mix. Since Batesville utilizes its own fleet to make deliveries, and since there is usually only a 2-5 day window of delivery opportunity, it is important that the data be available to find the most logical CSR with the needed product -- and to cut down upon unnecessary delivery mishaps and illogical routing.

Historical Background -- the issue for Batesville is one of growth and evolution -- as their business became more and more complex and market responsive, their needs for increased technology multiplied, as did both the flip-sides of complexity of information vs. ease of use. Beginning in the 1980s, Batesville realized the trend for PC usage and smaller, more virile, systems, would increase. Over the course of the next decade they installed, tweaked, and worked within the technological paradigm to increase their ability to be more responsive to the marketplace. Because they could not predict which operating system would finally "win," they had to guess and hope that the decision to use IBM's platform (largely due to potential software availability) would provide years of service. However, and as an example of the MIS Department's forward thinking strategies, Batesville took a leap of faith and entered into object oriented programming, allowing the "potential" for more flexibility and once the learning curve was handled, far fewer lines of code and a larger chance for speed and flexibility. While the initial learning curve was steep, the tenacity and strategic thinking paid off -- the company was able to implement a graphical user system that is both flexible, time-sensitive, and extremely data powerful than anything previously on the market. Kuisel noted, "it has taken longer than we planned, and a late project is always a disappointment. But the new system appears to be just what we wanted, and there is a lot of excitement about using it. The old system was getting to be a little shaky, but I'm confident that the new one is a solid foundation for what we want to do in the future" (Ibid., 154).

Challenging the System -- Essentially, Batesville was caught in a paradigm shift. Intuitively, and based on years of experience plus common sense, management was aware that in order to increase their profitability and net contribution to the parent company, their business model needed changing technologically in order to keep up with the changes within the marketplace. The casket business itself is one of latent demand -- it is not typically something a consumer spends time thinking about until necessary. Even those individuals with burial plans do not always pick the exact model of casket, and the trend toward cremation has made the market even more complex. The purchase of a casket is also tied into a very emotional time for the family -- regardless of the emotional preparation, numerous decisions need to be made in a relatively short time.

Fortunately, for Batesville, their network of distribution centers combined with their majority market share makes their business less consumer competitive and more service competitive for the funeral director. It is unlikely that a client will ask for a Batesville casket by name, but reliability, price, and availability play a continual part in choice. Indeed, because the choice of the casket is often strongly influenced by the funeral director, the relationship of B2B is far more crucial for Batesville. For Batesville to continue to grow its market when more consumers are opting for non-casket burial requires them to be able to provide an exemplary level of quality and service -- e.g. getting the appropriate product to the funeral home at the right time and without unnecessary delays due to weather, seasons, or logistical issues ("2009-2014 World Outlook," 2009).

For this to happen, however, the technological growth curve had to catch up with what the marketplace was telling Batesville management. The Batesville company knew it needed a technological solution that might be akin to going to the moon -- but only had simple calculators to do so. Instead, the decade between 1980 and 1990 became a growth decade in improving system efficiency, handling issues of logistical import, and designing a system that would incorporate the needs of the present and future to provide the type of sales and marketing answers so necessary for the company to increase market share even more.

Demographically, for instance, consumers of the 1990s and beyond have a less rigid, less formalized, view of death and the traditions and rituals surrounding the process. For example, "what unites [this] disparate group is the welcome promise of natural burial: simplicity, low cost, and return to the elements. . . or, as one gentleman who buried his wife in a plain, pine casket said….' It just struck me as the most logical thing to do" (Harris, 2007, 4). Thus, it was critical that Batesville do the following: a) ensure that internal system are never the reason to lose a sale; b) provide a level of exemplary service to the Funeral Home unmatched in the… READ MORE

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