ERP CASE STUDY

Mr. Alok Sharma is an Electronics and Communication engineer from IIT Kanpur. Being a very intelligent, studious and dedicated student he got a campus placement in Philips. Philips was one of the best companies to visit the campus and it offered the most coveted job profile. Also the pay package offered and a metropolitan location made Mr. Sharma extremely happy of his achievement. Along with Alok two if his best friends also got placed in Philips. Mr. Alok got into R & D division while his friends were inducted into finance and sales. He started working with radio frequency coils and in no time he became an expert in it. His friend, Mr. Ranade, who was in sales, looked after the customer/dealer relations of Philips. And the finance guy Mr. Satya went on to become an expert in his field. Four years after getting into job Mr. Alok started thinking of starting his own business. He persuaded his friends to join along with him for a startup venture. Initially reluctant though, after 6 months of continuous pressure from Alok, both of them got convinced and agreed to join his company. The informed Philips management about their decision and Philips offered to help them in every possible way for the initial start up. They named their company as Waves Electronics and started with a small single floor building at Hyderabad and with mere staff strength of 10. They started manufacturing induction coils. Philips promised to purchase induction coils for the next three years provided they met quality & assembly standards as laid out by Philips. Mr. Alok personally ensured that his products met Philipss quality requirements and did oversee the tests personally whenever possible. In a short span of time their reputation got established even in corporate circles of Philips and they started getting more and more orders. As the next phase of expansion they opened a factory for manufacturing tape recorders at Meerut. The new factory was a three storey building and the venture was financed by Philips partially. The break was like 65 % of the total investment was done by Philips and the rest 35% by Waves electronics. The staff strength increased to 40 in the new plant and most of the expert/skilled technicians were from NITs and IITs. Most of the orders were from Philips initially but as time progressed their reputation grew further and started getting orders from other MNCs like Samsung, LG and Sony. This led to a capacity expansion of their plant and they started getting more than the 50% of total Philipss order. They started manufacturing TV s in their new plant and Philips helped this by giving 20% of their total TV orders to Waves electronics. As they started getting more and more orders they started another new plant at Gwalior. There they employed more than 100 staff. They imported most of the materials from abroad and experts were employed to look after this material procurement. The new plant was a television producing plant exclusive for LG. Then Mr. Alok started dividing the work among his colleagues. He looked after the production and quality part of the three plants, Mr. Ranade looked after the new projects/new start up plants and further expansion & Mr. Satya took care of the vendor/customer relationship and finance. They were very keen in further expansion and took up an ambitious project of a mega factory with more than 500 people exclusively for exports at Chennai. They completed it within 15 months and started manufacturing electronic goods from it. But now they have started facing problems with inventory management & shortage of skilled manpower. Further Mr. Ranade who managed the sales and vendor/supplier relationships had to look after Gwalior operations as well as Chennai operations. Mr. Alok was responsible for all operations at these four plants. At the present situation Mr. Alok needs to take a decision whether to implement ERP in his

business or not? If to implement should he go for buying an ERP or develop his own?

Proposed Solution

If Mr. Alok decides not to expand his business further its better to develop an in house ERP System. In House ERP System will be a totally customized system with processes enabled as per the needs and demands of the company which will make it easy to handle. In house development would also be economical as development cost would be much less than cost purchase of ERP product. Also, there is no need to pay license fee or fee for renewal of license. However, if Mr. Alok has plans for further expansion buying an ERP product will be better. ERP Product Company will provide a consultant who will look into the functioning of Waves Electronics and will help to improve the existing processes. ERP Company will also help in training of the employees of Waves Electronics to get used to the ERP System. Company will also help in installation, updating and maintenance of the ERP System.