Enterprise Resource Planning

Enterprise Resource Planning (ERP) is a computer program that integrates accounting, sales manufacturing, finance, and other functions in a firm. All these functions are integrated through a database shared by all application programs. ERP plays a significant role in supply chain mgmt. by managing the movement of goods around a business and connecting the sources of supply and demand. Some of the key benefits of an ERP solution are - Data Security; Centralization; Improved Productivity; Mobility and Scalability; Cost Savings; Real Time Reporting; Operational Efficiency.

Back in the 60s, a tractor manufacturing company name J.I.Case in collaboration with IBM built a MRP (Material Resource Planning) software. A bunch of other companies built their own and in the next 20-30 years transformed into a standard ERP software supporting a host of business units. The key business units supported by ERP software in an organization are - Manufacturing & Logistics, Forecasting, Human Resources, Finances, and Sales and Marketing. Today, there are many ERP solutions available with SAP being the most popular ERP solution for 'Manufacturing' industry and Oracle Apps most popular for 'Finance'. I started my career implementing QAD's ERP Software for a FMCG industry.

Selecting an ERP software for the Organization is the most important step in an ERP implementation. A thorough review of the following outlines what is the best ERP solution -Requirements, Features, Cost to Ownership, System Integration, Support Training and Implementation, Customization. Most of the ERPs are designed following a standard industry process- but the ERP software also can customize workflows to suit the Organization needs.

The use-case attached shows how the ERP implementations in Nestle, Hershey's and Nike were a failure initially because of - poor planning; no clear objectives; key stakeholders working in silo with external consultants; zero involvement by employees who should use the software; employee resistance to change; no integration between the key business units. Sadly, in Hershey's case, this happened during the Halloween season and Hershey's couldn't ship candies as the key Business units were not connecting with the ERP system.

The 3 companies went back to the drawing board and implemented solutions like - better collaboration between stakeholders, software developers and the folks who use the software; defined clear objectives; requirements; didn't rush through to delivery; integrated key business units in the ERP solution; followed a phased approach; training and implementation to deploy the ERP solution in the second iteration.

Sustained and committed Leadership ensured that the ERP implementation was successful in Nike, Hershey's and Nestle. All the organizations benefited from the data centralization and were able to save money. (Nestle - $325M, Hershey's- $100M, Nike - not disclosed). Though the input costs and the earlier losses were high, these big corporations and were able to absorb the loss and get the ERP implementation right the second time.

A word of caution that ERP implementation is not always a path to success - FoxMeyer after an initial investment of $100M lost a lot of orders as their solution couldn't scale up to the transactional volume and was forced to declare bankruptcy. So, ERP implementation doesn't guarantee you success.

References:

Fargreatco, Bryan (2019, Oct 21^st): ERP Implementation's Failure cases (Valuable L../@bryan.fargreatco/erp-implementations-failure-cases-valuable-lessons-59f600fd4799

Carlton, Rick (2021, July 15^th): Four ERP implementation case studies you can learn fromhttps://www.erpfocus.com/erp-implementation-case-studies.html

B2B Innovation: How a Failed ERP implementation Took Down the FoxMeyer Drug Company

https://leanb2bbook.com/blog/how-failed-erp-implementation-took-down-5-billion-pharma-company/

QUESTION:

1. Does your organization use ERP? If yes- name, the ERP, and Business functions interlinked with the ERP solution.
2. Please name any Organization that implemented ERP-
   • What were the key objectives?
   • Name of the ERP Software
   • Annual savings/loss (if the information is public) post-implementation