Overstock.com, is an American online retailer with headquarter in Cottonwood Heights, near Salt Lake City, Utah. It was launched in May 1999, went public in May 2002, and after achieving significant growth and profits in some early quarters, achieved a profit of $7.7 million in 2009.

Before 2003, Overstock was using a home grown ERP package which recorded customer transactions in batches. In 2003, Overstock decided to implement Oracle Virtual Machine ERP to record daily transactions and avail benefits.

Unfortunately, the implementation was a failure. Overstock.com’s customer tracking systems were down for nearly a week. Investors lost money because for five and a half years’ overstock had reported false financials and led the company in 2008 to reduce its revenue over that time period by $12.9 million and a net loss of $10.3 million. The new ERP system also failed to subtract shipping revenue for those cancelled orders. The $2.95 charges per order eventually added up over time and became huge loss.

The short timeline contributed to the lack of research and development of the Oracle ERP system leads to this failure. Due to the rushed schedule, some modules testing was skipped. Besides, the system was not properly tested to identify its shortcoming in handling large amounts of orders. There was inadequate testing and insufficient time to debug the system to ensure its functionality. And there was no contingency planning to deal with changes in the business operations.

The failure of Overstock.com can be used as a lesson for companies who plan to implement an ERP system.  First of all, Project scope should be clearly identified with realistic time targets, and all employees should be well-trained in the new software.  Secondly, top management and the implementation team should have a close communication with the software vendor, consulting firms and IT people, ensuring that the project progress is running on the right track. Last but not the least, a contingency plan of how to survive in case of system failures should be developed.

Reference:

Success and Failure Examples of ERP Implementation

http://www.slideshare.net/sunidhikumari1/success-and-failure-examples-of-erp-implementation

 

When we were doing the “little game” during the classes this week, we carried out a whole business process from procumbent to production. It took entire 2 classes to finish one simple business process. So does erp really make our lives easier or harder?

The key factor is the automation. A lot of balancing, calculating in erp is automated to accelerate the business process. The advantages of automating workflows are that it often simplifies business processes by eliminating steps. With manual data entry and business processes, there are more checks and balances built into the workflow to eliminate errors. These additional steps not only slow business processes but also make them inefficient. With automated business processes, workflows are streamlined for greater operating efficiency and easier auditing.

Any data that is not automatically captured by the ERP system has to be entered manually or maintained separately for auditing and compliance, which creates added risk. Paper processes are prone to errors and harder to manage and track.

ERP systems integrate pertinent data and software systems for businesses so that employees, regardless of department, can access the information they need to do their jobs.

Reference:

Automating Business Processes Helps Improve Efficiency and Reduce Risk and Impact on The Bottom Line

https://www.oildex.com/about/news/automating-business-processes-helps-improve-efficiency-and-reduce-risk-and-impact-on-the-bottom-line/

How ERP Systems Can Automate Business Processeshttp://blog.icreon.us/launch/erp-systems-automate-business-processes

When comparing ERP and MRP, usually an ERP integrate and share the different types of data it collects among different company departments. While MRP solutions are usually standalone programs dedicated to that purpose, so they are not designed to integrate with types of data not used in materials requirements planning.

ERP covers areas such as Accounting (nominal ledger, fixed assets, accounts sales/purchase ledger etc); Human resources (payroll, time sheets, training etc); Manufacturing (bill of materials, QC, managing the manufacturing process etc); Supply chain (stock control, purchasing, scheduling) ; CRM (sales and marketing, support and customer service); Project management (managing costs, time and activities); Data warehousing (document management)

While MRP systems focus on the processes from quote, sales, raising works orders, stock control, purchasing and all stages of manufacturing through to invoicing, but traditionally tend to exclude processes such as CRM and accounting.

Any system – MRP or ERP – needs to also provide security at user level to ensure that the right employees have access to the right information. Each and every section mentioned above needs the ability to either block access or provide read-only access.

 

Reference:

MRP Versus ERP    http://sheetmetalworld.com/sheet-metal-news/17-it-for-manufacturing-management-and-production/11086-mrp-versus-erp

MRP vs. MRP II: What’s the Difference?   http://www.softwareadvice.com/resources/mrp-vs-mrp-ii/

In this week, we talked about the inventory and warehouse management in ERP. During the project discussion we found out that inventory is the “bridge” between different business process. Inventory management is way more important than we used to think; it plays a crucial role in every business process.

ERP systems help manage inventory up and down the supply chain and enable profitability and provide the competitive edge needed to survive. Having an ERP system to help you with the inventory management will benefit your organization in a few ways:

1. It provide the Real-Time Data

ERP inventory modules can help enable the controls that lead to accurate knowledge of inventory for every SKU. When a customer asks for availability, the ERP provides in real time exactly what is on hand and when the next incoming delivery is expected and nets that quantity against existing customer orders. Delivering on promises leads to satisfied customers.

2.     It helps with Planning Replenishment Orders

Inventory management allows you to properly plan your replenishment orders. Your inventory quantity must be accurate so when the signal to buy or make more is received. Your ERP inventory management system allows you to categorize parts which helps easily order the right quantity. One item is ordered only when there is a specific demand in exactly the quantity to meet the demand.

3.     It quickly reacts to Surplus Inventory

When surplus is caused by a decrease in some demand, your ERP inventory management system will spotlight the surplus immediately. There are options you have when the surplus is quickly found and reaction is immediate. Should you return the item? Can you contact the customer and ask for another order to use up the surplus? Delay might mean you move the surplus to the trash pile and disposition costs money instead of earning money.

Reference:

http://www.erpfocus.com/four-benefits-of-erp-inventory-management-2896.html

4 Benefits of ERP Inventory Management

http://www.erpfocus.com/erp-inventory-management-4-benefits-for-distributors-2690.html

ERP Inventory Management: 4 Benefits for Distributors

 

Any business can benefit by integrating its data systems, but due to their complexities, B2B organizations with eCommerce channels in particular should consider the advantages.

eCommerce has already changed the way companies do business and interact with their customers forever. Online stores have a number of benefits for customers and retailers alike. But maintaining an online storefront can quickly become an enormous, time-consuming hassle for retailers if their storefront isn’t linked to their ERP system.

This is because not having an integrated ecommerce and ERP doubles the amount of work retailers have to do. They have to manually enter and update information in both their online store and their ERP system. Not only is this a huge waste of time, it makes it much more likely that mistakes will be made, or that duplicate data will be entered.

Benefits of eCommerce ERP Integration

1. Reduce manual entry to save time and increase output while reducing errors, when entering order, inventory, item, customer and shipping data.
2. Streamline inventory synchronization, track updates, and provide accurate inventory levels to customers, without hiring staff to manage these tasks.
3. Automatically notify customers when orders have been shipped and allow them to track the delivery of products.
4. Simplify how you manage price and product changes to inventory.
5. Be flexible enough to add multiple online (web-stores and marketplaces) and offline (brick & mortar) sales channels, without losing operational efficiency.
6. Handle increased demand in online orders without extra resources.

In general, having accurate, up to date customer and order information makes it easier to provide great customer service.

Reference:

http://www.briteskies.com/integrations/

ECommerce and ERP Integration: streamline your business operations by leveraging back office data

http://www.aphixsoftware.com/2016/02/ecommerce-erp-integration/

ECommerce & ERP Integration

 

Target’s expansion into Canada failed very quickly. A lot of people think it is because Target wasn’t ready for its global expansion. But what is really wrong or what exactly “wasn’t ready”? Opening 124 stores within such a short period of time led to a big mass with inventory planning, disappointing shoppers expecting to see the same abundance they would see cross-border shopping in the United States. With bare shelves, Canadian shoppers couldn’t even shop if they wanted to.

 

Target Canada faced a choice: Adopt the US technology or implement something completely new. Adoption would have required customization for the Canadian dollar and French-language characters. Those changes would take time. Target was attempting something impossible: set up and run SAP in roughly two years – this doesn’t seem an impossibility – a challenge perhaps, but if you have the brightest resources on your project and you are deploying the best ERP application that money can buy.

When you have veteran employees on the payroll a greenfield implementation of SAP may be a great plan however when almost all your staff are fresh young graduates with little or minimal training and experience you need to have rock solid policies and procedures and need to have equally good consultants to help with the transition.

Target Canada hired the kinds of people that they felt that they wanted in terms of personalities, but junior staff received minimal training according to former employees who worked at Target in both countries.

Reference:http://www.essoft.com/2016/06/why-target-failed-in-canada-was-the-erp-system-rollout-part-of-the-problem/

Why Target Failed in Canada – Was the ERP System Rollout Part of the Problem?

This Thursday I went to the SAP HAUS Party and it was amazing. It was more like a party or social event rather than an information section. The vibe is awesome. They provide food, beer, ice-cream, most importantly, interesting people. I talked with different people from variety groups. The ones interest me was the BUILD, Internet of Things: Smart Connected Business and the Global Design. BUILD is a comprehensive set of cloud-based design tools used to create compelling enterprise apps. Design has emerged as a hot topic in the world of technology. With BBILD, users can create our prototype. The SAP Connected Good is a cloud-based Internet of Things solution. It is designed to maximize the value of revenue generating customer facing devices such as cooler, chillers, and vending machines. And the most interesting team is the global design app team. It creates a better user experience for different line of businesses. We talked about the “Millennials” project. It has been started for 10 months. The original user experience for SAP is not very user-friendly, and the company also realized that. I have used SAP as accountant, and I was looking forward to have a more user-friendly experience.

This week in class we talked about procurement in the ERP system. We took the grocery store Safeway as an example. Because Safeway is implementing the vendors manage inventory system, unless the goods’ material status got changed, it won’t create the financial impacts. This finding was interesting, and it creates more possibility for us when we are doing our own projects.

The whole procurement process should consists of these parts.

“1)Requirement: What is business needs that is called requirement
2)Source of supplier:its nothing like request for quotation sending the RFQ to supplier based on the who are supporting this project.
3)Vendor Selection:Once RFQ received we need to analyse who given best price meets the delivery requirement.
4)Order Processing:Once the supplier selected get confirmation from manager.
5)PO processing:Process the purchase order
6)Good Receipt: Once goods received enter the good receipt number to update the number in the system.
7)Invoice verification: Based on received good the price are correct or not
8)Payment processing.”

Some business has adopted the Procure to Pay model to cut the cost. By understanding the procurement process, we can manage the business more productively and efficiently.

(Source: Basics of External Procurement Process http://nazrinrizal.blogspot.com/2010/07/basics-of-external-procurement-process_15.html)

 

From the previous experience that I had as an accountant, I used all kinds of accounting software, like QuickBooks, NetSuite or Intacct. It could be very confusing find the distinction between an accounting software and a ERP system. Sometimes I even thought that they were the same thing. After this week’s lecture I got curious and went online to search for the differences between them.

Accounting software is “used to strictly to refer to the financial aspect of your business operations. These include accounts receivable, accounts payable, payroll, and trial balances. (ERP VS Accounting Software http://www.mrp.com.my/difference-is-between-erp-or-accounting-software/)

An ERP system on the other hand has more features than pure accounting software It’s a resource management system that not only monitoring the business’ financials, but also “tracks the following: tangible and intangible assets, human resources, and materials. Intangible parameters include working hours, product life cycles, key performance indicators, and customer relations.” (ERP VS Accounting Software http://www.mrp.com.my/difference-is-between-erp-or-accounting-software/)

Reference: ERP VS Accounting Software http://www.mrp.com.my/difference-is-between-erp-or-accounting-software/

Accounting software is more like a subset of ERP. When the company’s size is still small the pure accounting software may satisfy its business need. But a lot people believe that ERP system will gradually replace the traditional accounting software.

During the class discussion this week, we realized that how ERP system is helping business process integration.

Business process goes cross different department, and ERP system record business process. Without ERP system, a simple sales order needs all different departments to communicate constantly. ERP system help enterprise to save a lot of money and improve collaboration around varies departments while running business. Most importantly, ERP system stores a lot of important financial data and will help better decision making.

In managerial accounting, ERP system will help management to access reports more quickly and make a sufficient budgeting. ERP system can also help avoid repetitive communication and redundant operation.

Especially in the production industry, ERP system will help keep a better inventory control and production. We can minimize our inventory cost and production cost base on the sales orders we received.

In all, ERP system is helping managing operation in every aspect in the organization.