Case: Submit Electric Light Up with a New ERP system

Q1. Which business processes are the most important at Summit Electric Supply? Why?

There are several business processes that were used by the Summit Electric Supply company. Among them the important ones are: 1) ERP software from SAP-> Scalability and investors visibility was the two factors most important to the company and both these factors were very well tackled by the ERP software. SAP functionality in sales and distribution, materials management and financials greatly benefited the company to boost its distribution capacity. 2) SAP’s NetWeaver BW – For Business Intelligence reporting and analysis this process was used. This helped the company to evaluate the profitability of its sales channels, using what-if solutions. 3) The “Batch management” process- Wires and cable are Summit most important product category. It buys these products in reels of length 5000 feet and then cuts them into various lengths and sells to the customers which make it difficult to maintain the inventory of this product. The batch management process removed the problem of maintaining the inventory of such products.

Q2. What problems did Summit have with its old systems? What was the business impact of problems?

There were a few problems that Summit went through with when they were using the old legacy systems. Some of the few problems they came across were--- The old system caused them to have delay with their supplies. Also the system was complicated as it would separate different categories of products which eventually was difficult to combine when needed. The business impact from the problems was that the system was not able to keep up with the fast growing business. It limited the business as it was only able to handle a few range of numbers and location at a time. 

Q3: How did Summit’s ERP system improve operational efficiency and decision making? Give several examples.

ERP improved operational efficiency and give scalability and the ability in Summit’s business process, especially in supply chain areas like sales and distribution, inventory management and financial reporting system-as the company expected strong growth in these areas.

Running more frequent inventory updates

It’s running smaller and frequent inventory update throughout the day, instead of a night-which caused a delay. New system provided accurate information of shipping order, which Summit’s was able to ship immediately.

Adapting the inventory tracking process

To replenish wire and cable, the ERP batch material management identified the customer purchase amount, length of wire and product manufacturer. Each time a customer buys a length of wire, the length is entered into the system to track how much of the “batch” was sold.

Changing how inventory is managed at job sites

To secure inventory for special customers, with long term projects, Summit created a “parent- child” warehouse relationship in ERP system to secure the materials in inventory as well as on premises.

Business intelligence

To make a better manage its finance and ordering system, Summit implemented the SAP’s/NetWeaver BW data warehouse and business intelligence. By integrating the NetWeaver, Summit was able to analyze the profit of each sales person, manufacturer, customer and branch. Using SAP software, Summit was able to improve its ROI, by automating sales tax and chargeback’s. The SAP/Paybacks and Chargeback’s application was able to identify the billing activity, if there was a chargeback, the SAP system would automatically submit the information to bill the chargeback- increase its chargeback claims of up to 118%. Summit decision making for implementing the new ERP system was based on the growth of the organization, the complexities of processing orders, analyzing finances and back and reporting. Once the new ERP/SAP was in place, Summit management was able to focus on sales and orders and quotes, supplier performance and delivery schedule. The new SAP/ERP has allowed Summit to run its operations with flexibility and allow the SAP to operate efficiently. The new ERP system allowed management to have a greater vision for decision making and managing its operations.

Q4: Describe two ways in which Summit’s customers benefit from the new ERP system.

Firstly, customer can rely on the company for their needs and products- the company now more efficient. The company wants that customers to feel that they can provide that they have produced products the customer want and sent to them in short time period.

Second is to accommodate large customers with long term job sites. SES sets up temporary warehouse on site to supply these customers with its electrical products. Create “parent – child” warehouse relationship to be able to work with customers. If the SES office has more than a few temporary onsite warehouses, the warehouse can be controlled like subparts of the main SES warehouse. It helps to prevent anybody from selling the consigned inventory into the warehouse.

Q5: Diagram Summit’s old and new process for handling chargebacks.

Chargeback is the return of funds to a consumer. The chargeback mechanism exists primarily for consumer protection. For the distribution company, chargeback occurs when the supplier sells a product at a higher price to the distributor than the price they have set with the end user.

Old process

For handling charger backs had flaws in it where the company was losing money and sometime barely making any profit. Processing chargeback has to compare the sale to contract. A distributor can have up to hundreds maybe thousands of contract. SES need to identify the chargeback and which manufacturer with enough documentation of the contract or a lot of manual work. SES need go through the customers invoice with detailed manufacturers identified and put the chargeback in Microsoft Excel.

New process

For handling chargebacks had flaws more efficient. It automatically reviews Summit’s billing activity for the day. All chargebacks agreements loaded in the SAP system by the end of every day. There is a match in the system and they are able to claim. New process is able to create a separate chargebacks document outside the customer invoice and able to process more quickly with review in the same day. SES increased its claim by 118% over the old system.