Border States Industries Inc., also known as Border
States Electric (BSE), is a wholesale distributor for the construction,
industrial, utility, and data communications markets. BSE’s goal is to provide
customers with what they need whenever they need it, including providing custom
services beyond delivery of products. Thus, the company is not only a wholesale
distributor but also a provider of supply chain solutions, with extensive
service operations such as logistics, job-site trailers, and kitting (packaging
individually separate but related items together as one unit). In 2004, BSE
began upgrading its ERP system to a more recent version of the SAP software.
The software included new support for bills of material and kitting this
functionality enabled BSE to provide better support to utility customers
because it could prepare kits that could be delivered directly to a site. This
time the company kept customization to a minimum and used the SAP best
practices for wholesale distribution embedded in the software. BSE management
has pointed out that much of the work that was automated by the ERP systems has
been in the accounting department and involved activities that were purely
transactional. This has freed up resources for adding more employees who work
directly with customers trying to reduce costs and increase sales. The company
is using SAP’s Web Dynpro development environment to enable wireless warehouse
and inventory management activities to interact with the SAP software. And it
is using SAP NetWeaver Business Intelligence software to learn more about
customers, their buying habits, and opportunities to cross-sell and up-sell
products.
CASE
STUDY QUESTIONS
1.
What problems was Border States Industries encountering as it expanded? What
management, organization, and technology factors were responsible for these
problems?
The
Border States Industries encountering problem of the implementation of their
system up to-date in which they rely only to their old ERP system called Rigel
that cannot support the BSE’s new lines of business and extensive growth processes.
At that point, as a factor for the responsible of the said problem the BSE’s
management decided to implement a new ERP system and selected the enterprise
software from SAP AG in which the ERP solution included SAP’s modules for sales
and distribution, materials management, financials and controlling, and human
resources and BSE also decided to customize the system extensively. It wrote
its own software to enable the ERP system to interface automatically with
systems from other vendors, including Taxware Systems, Inc., Innovis Inc., and
TOPCALL International GmbH
2.
How easy was it to develop a solution using SAP ERP software? Explain your
answer.
At the time of the BSE’s management
implementation, it’s not that easy to develop a solution using SAP ERP it is
because the BSE had no experience with SAP software, and only few consultants can
familiar with the version of the SAP software that BSE was using and instead of
adopting the best-practice business processes embedded in the SAP software, BSE
hired consultants to further customize the SAP software to make its new SAP
system look like its old Rigel system in certain areas. Implementing these
changes required so much customization of the SAP software that BSE had to
delay the launch date for the new ERP system until February 1, 1999. By that
time, continued customization and tuning raised total implementation costs to
$9 million (an increase of 50 percent). Converting and cleansing data from
BSE’s legacy system took far longer than management had anticipated.
3.
List and describe the benefits from the SAP software.
When
the BSE decided to customize the system extensively they’ve wrote its own
software to enable the ERP system to interface automatically with systems from
other vendors, including Taxware Systems, Inc., Innovis Inc., and TOPCALL
International GmbH that gives them beneficial, these are: Taxware system in
which it enabled BSE to comply with the sales tax requirements of all the
states and municipalities where it conducts business, the Innovis system that
supported electronic data interchange (EDI) so that BSE could electronically
exchange purchase and payment transactions with its suppliers and lastly, the
TOPCALL system also enabled BSE to fax customers and vendors directly from the
SAP system.
4.
How much did the new system solution transform the business? Explain your
answer.
The
SAP ERP acquired several small companies and expanded its branch office
infrastructure to 24 states. Furthermore, because of the SAP software the
business grew further, profits and inventory turns increased.
5.
How successful was this solution for BSE? Identify and describe the metrics
used to measure the success of the solution.
Despite
of far longer enough of the implementation of the system still the problem has
been successfully resolve because in late 2006, BSE acquired a large company
that was anticipated to increase sales volume by 20 percent each year. This
acquisition added 19 new branches to BSE. These new branches were able to run
BSE’s SAP software within a day after the acquisition had been completed. BSE
now tracks 1.5 million unique items with the software. Since BSE first deployed
SAP software in 1998, sales have increased 300 percent, profits have climbed
more than 500 percent, 60 percent of accounts payable transactions take place
electronically using EDI, and SPA processing has been reduced by 63 percent.
The company turns over its inventory more than four times per year. Instead of
waiting 15 to 20 days for monthly financial statements, monthly and year-to-date
financial results are available within a day after closing the books. Manual
work for handling incoming mail, preparing bank deposits, and taking checks
physically to the bank has been significantly reduced. Over 60 percent of
vendor invoices arrive electronically, which has reduced staff size in accounts
payable and the number of transaction errors. Transaction costs are lower.
6.
If you had been in charge of SAP’s ERP implementations, what would you have
done differently?
If
had been in charge of SAP’S ERP implementations I would rather have to analyze
in advanced regarding in our fast changing developing generation and set a funds
for the implementation of the up to-date system that can be use as far as the
company needed it when the time comes to avoid delayed implementation because
of there is not enough funds to be implemented.
