Q. Given the list of costs and benefits of an ERP System, identify how Mar-Bal's experience with ERP upholds three of those benefits. Also, with respect to costs, identify three examples experienced by the firm mentioned below.
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MarBal is a private Company that makes composite plastic products and employs 350 people in four locations in North America. The company had all the classic earmarks of an outdated data-management system, including (1) the absence of convenient EDI portals for B2B uses (2) the inability to create advanced shipping notices for customers, (3) the inability to scan parts production from its shop ?oors, (4) poor inventory control over vendor-sourced products, (5) manual data entry of inventory data, which introduced data-transcription errors into the system, (6) the inability to meet growing data processing volumes, and (7) limited forecasting and reporting capabilities. In addition, the company took manual counts of its inventory every month. Partially as a result, it took nearly two weeks to complete month-end reports, delaying vital information to managers and sometimes responses to customer inquiries.
To address these problems, MarBal managers performed a systems analysis of its processes in order to better understand its system problems and to create a list of requirements for a new system. Given that the company was not in the software business and did not want to develop a customized system, its managers concluded that acquiring a new ERP system was its best course of action. After generating, and then narrowing, an extensive list of software vendors, the company eventually chose EnterpriseIQ from IQMS, which it ?rst installed at the company's headquarters in Chagrin Falls, Ohio and then later implemented company wide.
The new system is a comprehensive solution to Mar-Bal's many problems. For example, the system now provides full EDI capabilities for both customers and suppliers and allows employees to process hundreds of electronic invoices per hour if necessary. Because the production facilities now use a compatible bar-coding system, managers can scan and track every single box or part in its four inventory locations, whether from manufacturing or from external vendors-an improvement that has eliminated its earlier, error-prone data entry system as well as the need to take manual monthly inventories.
Internal communication among employees has also improved with real-time monitoring of inventory-even from remote locations. Floor-level employees now use computer tablets to enter manufacturing data immediately into the system as they complete jobs. Similarly, sales representatives can view available inventory on an up-to-the minute basis. In addition to these bene?ts, the company saves time and money. In total, the company estimates that it saves $270,000 per year across its four plants. This includes $62,000 annually with its real-time production monitoring system, $50,000 in improved inventory control, and $25,000 in month-end reporting costs. The company also estimates that it saves $55,000 each year by eliminating the 2,750 hours of labor it once needed to take monthly physical inventory counts (which it now only performs once a year), and 5,000 hours of machine time (which it lost when making those counts).