Just Sofas (JS) had begun the year full of promise with a new facility, restructured manufacturing process, and high hopes for its new ERP system. Most of the domestic furniture manufacturers had long since gone overseas, but JS believed being close to the customer gave it a competitive edge. The workers had rallied behind President Ruffner’s idea of guaranteed four-day deliveries on customer orders. And for a while, the promo had worked. Then orders began pouring in and the scheduling system imploded.
It was for just such a case that Ruffner had sought out an ERP system—to automatically handle customer orders, factory schedules, and supply chain coordination as demand varied. Ruffner had carefully chosen the ERP software package used by all the large corporations he knew of reasoning that if successful companies had chosen this vendor, who was he to choose otherwise? Implementation had proceeded carefully as well, one might say painstakingly slow, as the IT staff started with the finance module and worked down through sales and marketing, order fulfillment, production planning, MRP, capacity planning, and finally scheduling. Actually, the scheduling module was still having the kinks worked out and the bill of materials file had not been updated to the current catalog offerings, but everything else seemed to be working fine.
Ruffner had included statements about the ERP system in his earnings reports for the past three quarters, noting that “productivity wanes as new IT system is being implemented,” “earnings down as company adjusts to new ordering system,” and “scheduling glitch causes backlog of customer orders.” For this quarter, he was trying to put a more positive spin on “only 5% of orders shipped on time due to incomplete jobs waiting for materials that were not ordered as they should have been.” He supposed a more innocuous “new scheduling system still not up to speed” would suffice. What Ruffner really wondered was if the company could survive another year like this one.
1. What capabilities of an ERP system would be useful for a company like Just Sofas?
2. Describe the environment under which the ERP system was being implemented. Was due diligence conducted in choosing the ERP vendor?
3. Does Ruffner understand the relationships between strategy and operations? Why or why not?
4. What problems contributed to the disappointing results of the ERP system? How would you suggest that Just Sofa proceed next year?
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