Summary – This video uses example of H&B to explain the importance and issues associated with implementation of an ERP system. H& B is facing many inventory issues where they were not able to keep track of all the items they were selling. Moreover, there were instances where inventory was available in the warehouse but it took awhile for shipping departments to identify where those items were located. They were unable to manage the volume of orders that were coming in and they had fierce competition. They were left with two options either continue to use the existing model and struggle through the daily orders that needed to be fulfilled or have an entire revamp to have a new system. They decided to put an Enterprise Resource Planning (ERP) system in their organization to increase efficiency, volume and automated processes.
Ties to Course Concepts
ERP System – H&B decided to put an ERP system in place that will solve all of their problems by having all the information in one database that would increase customer service, profits and morale of employees in the company. Generally, the transition to an ERP system can be costly spread out over multiple years and the benefits are not visible for a few years until after the transition is completed.
Similar was the case for H&B where the transition process to SAP, an ERP solution was painful and long however, at the end showed magnificent results. The ERP system took about five years for deployment and the noticeable profits did not show up until after five years of deployment.
Cycle Time – The current processes at H&B had an accounts receivable time of about 365-400 days. This was due to the fact that the information was residing in many different areas of the company and it took a long time to gather that information. This time was greatly reduced once the ERP system was in place.
Supply Chain and Communication – the communication between sales and production people was not great and most of the...