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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Evan Wolkin

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