This is a short story about a wonderful return on investment.
Everyone loves a return on investment, especially if that investment
costs hundreds of thousands of dollars.
There is a small manufacturing company in Arkansas that installed and
implemented an enterprise resource planning system last year. The
industry in which the company works is not particularly important.
Neither is its geographic location. But the fact that the company, call
it Company A for the purposes of this story, decided to move forward and
install an ERP system is particularly important. It will change the
fortunes of Company A in rather short order.
Prior to the installation and implementation of its ERP system,
Company A shipped about $200,000 in inventory per week and it stored
about five weeks worth of inventory in its warehouses. But executives at
Company A figured there was a more efficient way to run the warehouses
and, in turn, the business of the entire company.
So after months of research and planning, after working with a top
technology firm, after moving forward to install that ERP system - and,
in particular, a handheld wireless scanning system to better handle its
inventory management - Company A did find a more efficient way. It was
able to decrease its amount of stored inventory to about three weeks
worth of items. That allowed Company A to free up about $400,000 in
working capital, more than the total cost of investment in the ERP
system. And that allowed Company A to restructure a large swath of the
way it now does business.
What is ERP? You might know, but even if you have a grip on the
technology, it has certainly changed since its introduction to the
business world in 1990, and it has changed even more during the last
couple of years.
"The term ERP has remained pretty stable," says Alex Attal, general
manager, Sage ERP X3, within Sage North America. "It was developed more
than 20 years ago, but we still use the name; it still means something.
The reason, I think, is because it has filled an important need for
businesses. The application is different, but the process is always the
same: How do you automate complex processes?"
