Summit electric light up meeting 4

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INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083SUMMIT ELECTRIC LIGHT UP WITH A NEW ERP SYSTEM

SUMMIT ELECTRIC LIGHT UP WITH A NEW ERP SYSTEM

Prepared by: Ismail Bin Mahedin (P13D122P) Samat Haron Bin Joll (P13D123P) Hjh Sulzarina Bt Hj. Mohamed (P13D119P) Dayang Suhana Bt Awang Bujang (P13D152P)

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Questions:- Question 1. Which business processes are the most

important at Summit Electric Supply? Why? Question 2. What problems did Summit have with its

old systems? What was the business impact of those problems?

Question 3. How did Summit’s ERP system improve operational efficiency and decision making?Give several examples.

Question 4. Describe two ways in which Summit’s customers benefit from the new ERP system.

Question 5. Diagram Summit’s old and new process for handling chargebacks.

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INTRODUCTIONSummit Electric Supply Co. Inc. engages in the wholesale distribution of electrical equipment, supplies, and solutions for the electrical professionals in the United States and internationally. The company is one of the top wholesale distributors.Summit obtains finished goods from manufacturers and sells them to electrical contractors working on projects ranging from small construction job to sophisticated industrial projects.

This company was known as middle on the supply chain, so it must be able to handle high volume of transactions and swift inventory turnover. However, the information built in the 1980s could not keep up with the business growth, it could only handle a fixed number of locations and limited the range of numbers that could be used on document.

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Question 1. Which business processes are the most important at Summit Electric Supply? Why?

Net Weaver Business Warehouse SAP Net Weaver offer users many advantages for all aspects of

business process management and supports the entire life cycle of business processes, from planning, implementation, and monitoring, to optimization. In the case of Summit Electric, this protocol was designed to make “better use of data in their ERP system.” Net Weaver software helped Summit Electric evaluate profitability from its “sales channel” from consumers, sales, and manufacturing. Using business intelligence (BI) solutions, Summit Electric has focused on sales order quotes, to supplier performance, and delivery times.

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Paybacks and Charge backsFor Summit Electric keeping track of the vendor cost recovery programs, validity dates, and associated SKUs using outdated legacy systems was a daunting task; complexity creates costs and errors. As Summit Electric grows exponentially, they needed an ERP system that measured orders and inventory at the growth pace and also reduce costs and errors.

With this software solution, Summit Electric can capture charge back data; manage claims, control varied and changing charge back agreements. The application ultimately changes paybacks and charge backs management to a systematic and effective methodology.

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This application also helps Summit Electric to: Continually create and manage agreements to

maximize charge back recovery Communicate with vendors electronically (Web

or email) Produce separate charge back audit trails

(activity reports), and other timely reports.

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Question 2. What problems did Summit have with its old

systems? What was the business impact of problems?Summit Electronics is a major corporation, which began in 1977. It developed it’s own legacy information systems in the 1980’s, but the rapid growth of the business quickly outpaced its IT systems – and this left a very high degree of outmoded systems with high fragmentation. For example, the legacy system built exclusively for sales entries and purchase orders is completely separate from the system, which handles back-end reporting.

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The problem with this type of system is that integration and response time suffer greatly. Batch processing the data from the two systems into an integrated database was a manual process which drained efficiency. The system was only able to handle a certain finite number of locations and only had a limited number range for documents which created a problem of having to reuse numbers from period to period.

This created not only confusion but the company was also unable to process financial updates and nightly inventory numbers in the space of time they had. Clearly, they needed to update their systems with a major overhaul, but they had built and organized most of their business around the existing legacy systems.

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Question 3. How did Summit’s ERP system improve operational efficiency and decision making? Give several examples.Summit realized its home grown legacy information system built in the 80’s could not keep up with the business processes. Understanding the challenges of integrating a new ERP system and mindful of its priorities, Summit selected the SAP/ERP system. The new system requirement needed to provide the ability to view and manage sales and distribution, material management, scalability, inventory management and financial reporting system.

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The new ERP system improved operational efficiency, by running smaller and frequent inventory update throughout the day; instead of at night- which caused delays. The new ERP system provided accurate information of shipping orders, which Summit was able to ship immediately.

To replenish wire and cable, the ERP batch material management system identified the customer, purchase amount, length of wire and product manufacturer. To secure inventory for special customers, with long term projects, Summit created a “parent-child” warehouse relationship in the ERP system to secure the material in inventory as well as on premises.

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To better manage its finances and order system, Summit implemented the SAP’s / Net Weaver BW data warehouse and business intelligence solution to better understand the ERP data. By integrating the Net Weaver, Summit was able to analyze the profit of each sales person, manufacturer, customer and branch. In using the SAP software, Summit was able to improve its ROI, by automating sales tax and charge back’s. The SAP/Paybacks and

Charge back’s application was able to identify the billing activity, if there was a charge back, the SAP system would automatically submit the information to bill the charge back. The ability of having the SAP/ Payback and Charge back’s allowed Summit to increase its charge back claims of up to 118%, increasing its revenue as a percentage of sales.

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Summit’s 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 end reporting. Once the new ERP/SAP was in place, Summit’s management was able to focus on sales orders and quotes, supplier performance and delivery schedule.

As well, have a better understanding of the organization as a whole. 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 making decision and managing its operations.

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Question 4. 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 on site 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.

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Question 5. Diagram Summit’s old and new process for handling charge backs.

Charge back is the return of funds to a consumer. The chargeback mechanism exists primarily for consumer protection. For the distribution company, charge back 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 charge back has to compare the sale to contract. A distributor can have up to hundreds maybe thousands of contract. SES need to identify the charge back 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 charge back in Microsoft Excel.

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New processFor handling charge backs had flaws more efficient. It automatically review Summit’s billing activity for the day. All charge backs 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 charge backs 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.

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THANK YOU

INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083

SUMMIT ELECTRIC LIGHT UP WITH A NEW ERP SYSTEM