Question

Enterprise resource planning (ERP) integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so that employees can make decisions by viewing enterprisewide information on all business operations.

ERP as a business concept resounds as a powerful internal information management nirvana: Everyone involved in sourcing, producing, and delivering the company’s product works with the same information, which eliminates redundancies, reduces wasted time, and removes misinformation.

ENTERPRISE RESOURCE PLANNING BUSINESS DILEMMA:

You have recently started selling a few new products including customized CDs, customizable coffee presses, and coffee-of-the-month and tea-of-the-month programs. Each time you develop a new product you are forced to create an entire new system to track sales. You are not sure why the accounting system you purchased forces you to do this, but you are stuck with this system until you can replace it. You quickly notice that separate systems for each different line of business including coffee, tea, CDs, equipment, programs, etc. is going to hurt your business. You notice that each system works independently to perform its job of creating, updating, and maintaining sales information, but you are wondering how you are going to operate the business as a whole.

Create a list of issues you will encounter if you continue to run the business with separate systems, performing the same operations, for each different product.

What could happen to the cafe if you cannot correlate the details of each system?

How could separate systems for each product hurt marketing campaigns?

Be sure to highlight at least 10 issues where separate systems could cause problems running your business.

At The Broadway Cafe customers receive more than just a great cup of coffee - they receive exposure to music, art, literature, and town events. The cafe’s calendar for programs gives their customers a quick view into their corner of the world - from live music and art displays, to volunteering or a coffee tasting. The cafe offers the following:

Music Center - Information of all live music events occurring in the area. The store also hosts an open microphone two nights a week for local musicians.

Art Gallery - A space in the store filled with great pieces from local artists.

Book Clubs - Customers can meet to discuss current and classic literature.

Coffee Sampler - Customers can sample coffees from around the world with the experts.

Community Events - Weekly meetings are held where customers can find ways to become more involved in their community.

Brewing Courses - Offer the finer details of the brewing, grinding, and blending equipment for sale in the cafe - from the traditional press to a digital espresso machine. Also, includes a trouble-shooting guide developed by brewing specialists.

The Broadway Cafe sales are great and profits are soaring, however, current operations need a complete overhaul. Your grandfather built the business piece-by-piece over the last few decades. The following offers a quick look at current operations.

The cafe does not receive any information on how many of its customers attend live music events. Musicians typically maintain a fan e-mail listing and CD sales records for the event, however, this information is not always provided to the store.

Book club events are booked and run through the local bookstore - Pages Up. Pages Up runs a tab during the book club and provides the cafe with a check at the end of each month for all book club events. The cafe has no access to book club customer information or sales information.

Artist gallery is run by several local artists who pay the cafe a small commission on each sale. The cafe has no input into the art contained in the store or information on customers who purchase art.

Coffee sampler events are run through the cafe’s primary operations.

Community event information is open to all members of the community. Each event is run by a separate organization, which provides monthly event feedback to the cafe in a variety of formats from hand written notes, to Word, to Access files.

Brewing and machine resource courses are run by the equipment manufacturer and all customer and sales information is provided to the cafe in a Word document at the end of each year.

You want to revamp the way the cafe operates so you can take advantage of marketing and sales opportunities across its many different lines of business. For example, offering customers who attend book club events discounts on art and brewing and machine resource courses. You also want to gain a better understanding of how the different events impact sales. For example, should you have more open microphone nights or more book clubs? Currently, you have no way to tell which events result in higher sales.

Create an ERP strategy to help gain visibility across the cafe.

Create a list of issues you will encounter if you continue to run the business with separate systems, performing the same operations, for each different product.

What could happen to the cafe if you cannot correlate the details of each system?

How could separate systems for each product hurt marketing campaigns?

Be sure to highlight at least 10 issues where separate systems could cause problems running your business.

Create an ERP strategy to help gain visibility across the cafe. Please consider all that happens in the cafe from the information listed above

Answer 1

Ans 1) Some of the issues which would be encountered if a business uses separate systems for different products are:

• There will be repetition of same information since separate system will use the same information many times.
• Use of separate system and performing the same business operations will lead to wastage of time.
• Use of separate system may also cause misstatement of information.

Thus, if separate systems are used for distinct line of products of a business it will adversely affect the working and profitability of the business firm as a whole.

Ans 2) If there is a problem in correlating the details of each system there will be uncertainty and variability of business operations in Broadway Café due to discrepancies which will take place as a result of failure in assimilating information of each system. Also, there will be a great obstruction in planning, organizing and controlling of business resources in addition to hindrance in the production and delivery of goods and services of a business firm.

In the absence of correlation of each system there will be delay in meeting inventory orders and sales of product. There will be ineffective communication within the business organization and poor approach towards solving problems of customers. As a result customer volume and profitability will shrink.

Ans 3) Separate systems for different products also harm marketing campaigns. Since due to misinformation about market environment there would be decrease in overall sales of a product. With inadequate information about the actual market conditions it would be really tough for the sales managers to implement suitable marketing methodologies. Improper communication and integration among departments also affect marketing campaigns.

Ans 4) Issues causing problem in carrying out business operations due to separate systems are as under:

1. Operating each system would be time consuming.
2. It would be difficult for the Café to sustain competitive advantage.
3. Flow of information from one department to another department would be very slow resulting in ineffective decision making.
4. Repetition of information would cause mistakes and errors.
5. There would be wastage of material and financial resources.
6. The internal control within the business organization is affected since there is inefficiency in obtaining information about other departments.
7. Use of separate systems requires high cost of maintenance.
8. There would be silos effect due to ineffective communication within the organization.
9. It would be difficult to evaluate the overall performance of the Café business.
10. Since separate systems produce separate information reports about different product line it is difficult to integrate information reports of all the departments to get an overall perspective about the entire business performance.