It’s amazing how one little thing can make such a big difference. Like a rudder turning a huge boat, an enterprise resource planning (ERP) system can steer an organization in the right direction. But when an organization chooses a poor ERP system, it can wind up getting shipwrecked.
Wasted Money
For example, a Commonwealth Foundation report shows that the Pennsylvania Liquor Control Board (PLCB) spent more than $66 million in taxpayer funds to build “a computerized inventory management tool that caused widespread shortages at PLCB distribution centers and cost two-and-a-half times the original plans.” That’s a lot of money to spend on an ERP system that doesn’t work.
This multimillion-dollar ERP system wound up costing PLCB even more money as time went on. Its inaccurate predictions encouraged certain retailers to hoard products while other retailers suffered major shortages. When PLCB tried to compensate by ordering more products, they made the problem worse by having too much inventory on hand and too little demand.
Not Just Inventory
It gets worse. “Due to the mismanaged inventories, the PLCB then spent approximately $500,000 for trailer rentals and additional security guards,” the report says. In Philadelphia, Pittsburg and Scranton, PLCB’s inventory doubled, going far beyond their storage capacity. So they rented non-temperature-controlled trailers, which contributed to faster spoilage and more expense.
With so much money already down the drain, hopefully PLCB can cut their losses on this failed ERP system and try something that works.
Don’t Let It Happen to You
While this example focuses on government waste, this same situation could just as easily happen in the private sector. If your business uses a poor ERP system, you could wind up paying for it for years in the form of out-of-balance inventory, lost sales and too much warehouse space.
Don’t let that happen to you. Get the facts on what features you need – from purchase order creation to shipment tracking – and make sure the ERP system you choose has those features for a reasonable price. Sixty-six million dollars is way too much to pay for one. Even $100,000 is too high. Get a free trial of an ERP system that costs a fraction of these prices to keep your company sailing smoothly.
Tagged: alcohol, Business Tips, Cost Savings, enterprise resource planning, ERP, Government, inventory, inventory management, news, pennsylvania, Report, Retailer
