Border States Industries Fuels Rapid Growth with ERP
Order Instructions:
Read the case and answer the followings:
1. What problems was Border States Industries encountering as it expanded? What management organization and technology factors were responsible for these problems?
2. How easy was it to develop a solution using SAP ERP software? Explain your answer
3. List and describe the benefits form SAP software
4. How much did the new system solution transform the business? Explain your answer
5. How successful was this solution for BSE? Identify and describe the metrics used to measure the success of the solution
6. If you had been in charge of SAP’s ERP implementations, what would you have done differently?
SAMPLE ANSWER
Border States Industries Fuels Rapid Growth with ERP
- What problems was Border States Industries encountering as it expanded? What management organization and technology factors were responsible for these problems?
One problem Border States Industries encountered as it expanded was lack of appropriate system that could support its new lines of business. The Rigel system it had was only restricted and limited to electrical wholesalers. It therefore needed to solve this problem to enable it continue with its operations smoothly. The company as well suffered as processes were stopped as the managers worked on the proposed new solution. This therefore meant that the company had to incur losses in terms of its sales because of these day-to-day disruptions. It also faced problems related with shortage of experts/consultants with experiences in SAP softwares making it to hire consultants to consume it to look like its old Rigel in some of its areas (Shepherd & Cordier, 2010). This caused delays and inconveniences.
The problem therefore was caused by failure of management to plan. Had they planned and anticipated growth of business in advance they could have made early preparation. Technology factors as well contributed to the problems. Technology the company had adopted earlier was not reliable and this caused delays and interruptions that contributed to the company incurring more expenses.
- How easy was it to develop a solution using SAP ERP software? Explain your answer
SAP was customized to conform to the old Rigel system. The software was easy to use after its customization. It allowed automatic interface with other systems from vendors such as Taxpayers systems Inc., TOPCALL International GmbH, Innovis Inc among others. This therefore made it easier for the company to transact with its suppliers and other stakeholders. For instance, TOPCALL system enabled the company to fax customers and vendors directly from the SAP system. This therefore, made it easier for the company to make transactions with its customers and remit taxes to the government among other functions.
- List and describe the benefits from SAP software
The more recent version of SAP software had a number of benefits to the company. One of the benefits is that it supported bills of material and kitting not available in the older system hence utility customers could easily be serviced since it prepared kits that could be directly delivered to the site (Shepherd & Cordier, 2010). The SPA software as well allowed the company to process more than 360,000 claims every year. The software is also important in helping track more than 1.5 million unique items across various branches the company runs (SAP, 2013). The softwares also helped the company to increase its sales with 300 percent, profits increased by 500 percent and it allowed more than 60 percent of transactions to be carried out using electronic EDI. The SPA processing as well reduced by 63 percent.
- How much did the new system solution transform the business? Explain your answer
The new system solution contributed greatly to business transformation. The company process and operations improved to drastic levels. The company began to turn over its inventory more than four times every year. This indicated that its stocks increased as transaction were processed quickly (Computer Economics Report, 2014). Furthermore, financial monthly statements and year to date financial results could be accessed within a day after the closure of the books. Most of the operations were done electronically and this reduced manual work which was slow and tiresome. For instance, the company incoming emails, preparation of bank deposits became computerized. Vendor invoices as well arrived through electronic means hence reducing the number of staffs that were required. The company therefore saved cost of labor. Transactional errors reduced as well enabling the company to reduce the huge losses it was incurring.
- How successful was this solution for BSE? Identify and describe the metrics used to measure the success of the solution
The solution contributed to success of BSE. It allowed standardization of data and this allowed management to access to up to date information hence made quick decisive decisions pertaining to their operations that impacted positively on the company financial status.
The metrics used to measure the success of the solution was use of costs as percentage of sales. Gartner Group consultants categorized these costs as costs of goods sold, warehouse costs, overhead and administration, IT support and delivery. The analysis indicated that between the year 1998 and 2001 implementation cost of SAP software was $ 9 million and investment that was paid back by the savings accrued from the new ERP system in a span of two and a half years (Shepherd & Cordier, 2010). Furthermore, it was revealed that the software produced a saving of $30 million between 1998 and 2006. As a percentage of sales, delivery cost reduced by 0.5 percent, warehouse costs by 1 percent, while overhead costs by 1.5 percent.
- If you had been in charge of SAP’s ERP implementations, what would you have done differently?
If I were in charge of implementing SAP, I would have done a number of things differently. I would have incorporated in the software additional software for decision support. The softwares would be able to produce reports on the markets trends and the business in entirety to help in informing decisions. As internet grows and expands, I would as well come up with a system that would allow customers to make their purchases, make orders and even review invoice. This would ensure that the company remain the best option to shop hence make it gain a competitive edge.
References
Computer Economics Report. (2014). Fighting Complexity: Can SAP Run Simple? , 36(7), 16- 20.
SAP. (2013). SAP AG SWOT Analysis. 1-8.
Shepherd, J., & Cordier, A. (2010). Border States Industries, “Operating Systems SAP Software
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