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ERP for the Small Business

PROBLEM:  

A well-known manufacturer of tags and labels was ready to upgrade their business system. Their current DOS-based system was inflexible and expensive to maintain.  State-of-the-market for ERP systems is to have real-time data access with easy downloading to spreadsheets and documents for custom reporting.  They didn't have any of these advantages.  The company had investigated several network-based systems but had a hard time justifying the upgrade.  After all, for the same amount of capital, they could buy a new printing press.

APPROACH:

The company approached CMS for help in selecting and implementing a new ERP system.  We began by documenting the needs of each function and criteria for the new system.  Each department also identified current users and projected their needs if a new system were in place.  With new technology and the desired flexibility available, the management team determined that they could operate with fewer employees requiring system access.  This change alone could lower their software lease agreement by as much as $25,000 per year.  After the software was selected and they had developed a budget for the project, the management team worked through a template to capture additional benefits they anticipated from the new system.

RESULTS:

The annual benefits were: 

§         3% increase in sales  

§         10% decrease in raw material inventory

§         10% decrease in setup time

§         20% decrease in WIP

§         25% decrease in scrap and rework

§         $100,000 in labor savings 

A value was assigned to each of these benefits, and the team calculated a pay-back period of 8–9 months.  By working through a rigorous return-on-investment, the company determined that a new system was a viable investment.

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