Companies implement ERP software because it allows them to organize and integrate different inventory control applications. There have been a number of inventory control disasters over the years. The bright side is these problems have taught companies new ways of successfully implementing an ERP system. These are some of the biggest lessons learned from ERP debacles at prominent global companies:
HP’s struggle to manage orders
In 2004, HP implemented new ERP software, but the company soon found the system was unable to keep up with the high volume of customized orders. According to CIO, the company had quite a large increase in the volume of orders, and the system could not handle it. HP expected a rise in orders, but the increase happened right as the new system went live. Small issues and bugs are common when a system is put in place, but these problems plus a high number of new orders created a bad situation resulting in losses for HP.
The lesson learned from the HP situation is to not install a new ERP system when a jump in orders is expected. Pick a time when the system can easily manage a smaller number of orders. An inventory control system would have helped HP in 2004 because it would have determine what products are selling best. HP could have then prepared for upcoming demand.
Nike’s software glitch
In 2000, Nike had trouble with its new ERP software, and the debacle ended up costing the company over $100 million. The system ordered way more Air Garnett sneakers than the company could sell. The system also created fewer orders for Air Jordan sneakers than demanded. The system was designed to use past data to predict demand, but the system could not calculate the numbers properly. CIO reported the value of Nike stock decreased 20 percent after the incident. The glitch in Nike’s software affected its delivery and inventory control methods. The company said the system failed because it was too slow, implementation was rushed and employees weren’t properly trained.
There are several lessons to take away from Nike’s software problems. First, make sure all employees know how to work the new inventory control technology. Second, if a system uses past data to predict future demand, make sure it can do so accurately. Finally, do not rush the implementation of an ERP system.
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