Week 4 power point slide -2-case study 2-summit electric light up with a new erp system

INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
SUMMIT ELECTRIC LIGHT UP WITH A NEW ERP SYSTEM
ASSIGNMENT 4 – CASE STUDY 2
TITLE: SUMMIT ELECTRIC LIGHT UP WITH A NEW ERP SYSTEM
LECTURER: PROFESSOR DR. RUSLI ABDULLAH
(email: rusli@upm.edu.my)
GROUP 13 Matrix No:
1. Hj Nasseruddin Bin Hj Abdul Jabar - P13D142P
2. Hj Zulkifflee Bin Hj Sofee - P13D136P
3. Chong Min Fatt - P13D154P
Prepared by: Hj Zulkifflee
1

• 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.
2

• INTRODUCTION
Summit 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.
3

• 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.
4

• Paybacks and Charge backs
For 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.
5

• 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.
6

• 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.
7

• 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.
8

• 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.
9

• 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.
10

• 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.
11

• 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.
12

• 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.
13

• 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.
14

New process
For 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.
15

THANK YOU
• PREPARED BY GROUP 13:
HAJI ZULKIFFLEE BIN HAJI SOFEE - P13D136P
HAJI NASSERUDDIN BIN HAJI ABDUL JABAR - P13D142P
CHONG MIN FATT - P13D154P
16

Week 4 power point slide -2-case study 2-summit electric light up with a new erp system

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Week 4 power point slide -2-case study 2-summit electric light up with a new erp system