MRP
Systems: Conserving Human Resources
When a company underestimates
its human resources, it can waste more than it saves in terms of money, time, and
intellectual property. Companies considering investing in technology and its
material requirements planning (MRP) system initially think that there is no
need to invest in additional modules because enough employees exist to handle
the tasks.
A Forbes
article analyzed the ERP system market back in 2012. “SAP had just over $6B
in total ERP software revenue in 2012, leading the worldwide market with 24.6%
market share. Oracle (ORCL NaN%) had
$3.12B. From Burleson
Consulting, “Oracle Applications is one of the world’s most complex ERP
tools with over 130 specific business functional areas”. SAP’s Wiki informs SAP has more
than 270 different modules.
These two companies are not
deceiving hundreds of businesses with non-profitable modules. There is a reason
they have such a variety and expansive service to offer companies. What they
have to offer saves time and money and human resources.
Scenario A: A company decides to
save money by not investing in a module that allows SAP to produce reports that
show all orders with a supplier—including the exception messages for meeting
that company’s production schedule. This module also has the ability to send
the report directly to desired suppliers because it is connected with the
company’s Outlook or messaging system. Without this tool, the company’s employees
have to take the time and run the reports. Those employees have to wait for the
report to finish, export it to Excel, and then send emails to the suppliers.
Depending on the amount of open orders and the amount of suppliers, this could
take an employee ten percent of their weekly time allocation. With that ten
percent of the employee’s time lost, there have no time to think strategically
and consider ways to save the company money. The employees do not have time to
develop new intellectual property for the company. The possibilities are
endless with what a human could do with their time. The possibilities are
limited when they are tasked with assignments a computer could do.
Scenario B: A company decides to
save money by not investing in a module of Oracle that analyzes order patterns
and inventory levels of a manufacturing company. This module could have provided
insight to reaching the economic order quantity desired. The module could be
set to a forecasting model that fits the companies industry and size. Instead
the company now wastes money by purchasing more than what it needs of some
products and has shortages of other products.
Why do so many companies neglect
to take the time with an MRP expert to determine which modules fit best for
their requirements, their staff capabilities, and ultimately their strategic
goals? We know that a dollar now is
better than a dollar tomorrow. However, the dollar now can be better spent to
save more money in the long run.
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