What Would You Do If You Suddenly Found 5,000 Extra Machines ✓ Solved

What would you do if you suddenly found 5,000 extra machine hours?

Review the items in Figure 12-10, which lists indicators that a company may need a new or upgraded processing system. For each item, provide a specific example from the case description. If the case does not address a particular item or it does not seem to apply, simply state “NA.”

1. Outdated or malfunctioning processing systems

Example: The case describes Mar-Bal’s existing ERP as outdated and difficult to support, which hindered operational efficiency and increased support costs.

2. Significant manual processing and redundant data entry

Example: The manual inventory verification process that took employees six hours daily, coupled with manual data entry, indicates a reliance on labor-intensive processes due to system limitations.

3. Inadequate real-time data or visibility into operations

Example: Mar-Bal lacked real-time inventory and production visibility, resulting in manual inventory counts and delayed decision-making.

4. Poor integration between different business functions

Example: The old system did not support seamless communication between departments, causing delays and inefficiencies, particularly evident in month-end closing and inventory management.

5. Limited or no support for Electronic Data Interchange (EDI)

Example: The old system had limited inbound EDI capabilities and lacked outbound EDI functions, impeding efficient communication with customers.

6. Unable to accommodate growth or increased transaction volume

Example: The outdated system was unable to process more transactions efficiently, forcing manual workarounds as manufacturing expanded.

7. Excessive time and cost in month-end close and reporting

Example: Previously, month-end activities took nearly two weeks; after ERP implementation, this was reduced to four days, reflecting improved efficiencies.

8. Increasing operational costs or inefficiencies

Example: The case notes that operating the old system was becoming more expensive due to support costs and inefficiencies, prompting a switch to a new ERP system.

9. Lack of inventory control and tracking capabilities

Example: The old system could not track inventory on-site or at customer locations, complicating inventory management and vendor-managed inventory (VMI).

10. Poor customer service due to lack of system access or data sharing

Example: Sales staff on the road could not access order status or inventory data, leading to slow responses and poor customer service.

Now review the items listed in Figure 12-9, which lists possible measures of the value of an ERP. For each item, provide a specific example from the case description. If the case does not address a particular item or it does not seem to apply, simply state “NA.”

1. Cost reductions

Example: Mar-Bal saved $83,000 annually by eliminating monthly physical inventories and shortened month-end closing by $23,000 annually.

2. Improvements in process efficiency or productivity

Example: Inbound EDI processing saved eight hours daily ($40,000/year), outbound EDI saved four hours daily ($20,000/year), and real-time dashboards saved 12 hours daily ($62,000/year).

3. Better decision-making capabilities

Example: Real-time production monitoring and comprehensive reporting allowed Mar-Bal to make more informed operational and strategic decisions.

4. Enhanced customer service

Example: Customers benefited from quicker order processing and real-time order updates, reducing response times significantly.

5. Increased capacity for growth without proportional increases in staff

Example: The ERP system enabled processing of twice the transaction volume with existing staff, avoiding additional hiring.

6. Improved compliance and quality standards

Example: As an ISO-registered company, better quality control and traceability are implied benefits, supported by the ERP’s quality management modules.

7. Reduced cycle times

Example: Month-end close time reduced from 8-12 days to 4 days, reflecting faster financial reporting.

8. Improved inventory accuracy and visibility

Example: Inventory tracking moved to real-time, barcode-based systems, drastically reducing errors and physical counts.

9. Enhanced reporting and forecasting capabilities

Example: Use of Crystal Reports and Spreadsheet Server improved forecasting accuracy and planning for future demands.

10. Increased staff morale and engagement through better tools

NA.

What are some of the intangible benefits Mar-Bal appears to enjoy from its new ERP system? Create a list with brief explanations.

• Enhanced interdepartmental communication and collaboration: The new system’s integrated modules break down silos, enabling departments to access common data, fostering a culture of transparency and teamwork.
• Improved employee satisfaction and morale: Automation of manual tasks reduces frustration, increases efficiency, and allows employees to focus on higher-value activities, boosting job satisfaction.
• Better customer relationships: Quicker response times and more accurate order fulfillment enhance customer trust and loyalty, although these are more tangible, the positive perception is an intangible benefit.
• Strengthened competitive advantage: Access to real-time data and improved agility enables Mar-Bal to respond more swiftly to market changes, maintaining a competitive edge.
• Culture of continuous improvement: The systematic and transparent flow of information encourages proactive problem-solving and process optimization initiatives across the organization.

Considering the case details, do you think business process re-engineering (BPR) took place during the ERP implementation? Justify your answer with arguments.

I would argue that significant BPR likely took place alongside the ERP implementation. Evidence suggests that Mar-Bal’s previous manual processes—such as physical inventory counts, manual data entry, and disconnected communication channels—were fundamentally rethought and automated through the new system. The dramatic reduction in physical inventories from monthly to annual reviews indicates a redesign of inventory management processes, moving from manual counts to real-time barcode scanning. Similarly, the automation of order processing via EDI and auto-invoicing fundamentally alters how order fulfillment and billing are conducted, replacing manual and error-prone workflows with streamlined electronic processes.

Moreover, the integration of various functional modules—such as manufacturing monitoring, warehouse management, and quality control—implies a rethinking of existing processes to align with the new system’s capabilities. The shift from isolated departmental operations to a unified, transparent system reflects core principles of BPR, aimed at radical process improvements rather than incremental ones.

Therefore, it is reasonable to conclude that the ERP deployment at Mar-Bal involved extensive business process re-engineering, aiming to optimize workflows, eliminate redundancies, and leverage technology to transform operations into more efficient, agile, and data-driven processes.

References

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