WordPress.com



Starbucks – Advantages of ERP ImplementationThe advantages of Starbucks implementation of a new Enterprise Resource Planning System were very typical of many other ERP implementations with a large focus on supply chain management. Starbucks discovered that their annual costs for their supply chain was growing and over the same period annual sales at stores that were opened for at least one year dropped by 10%. They were able to discover that the two main issues with their supply chain stemmed from the untimeliness of deliveries and that 65-70% of the costs for their supply chain was due to outsourcing. The new system reorganized the supply chain into simplified chain functions that would put a focus on the procurement aspect. Since Starbucks spends $600 million annually on coffee and $2.5 billion annually on dairy and paper goods this was a major area that needed to recognized in the new system. The system is able to manage the purchasing of goods from the many coffee plants that they are involved with throughout the world. Starbucks recognized $500 million savings in the 2 years after the implementation of this new system. The system also eliminated the need for paper forms and emailing orders. All orders go through the system and are automatically updated when the purchases were acquired, billed, and paid for. With the new streamlined processes the effectiveness and timeliness of ordering and stores receiving the goods needed, stores are no longer waiting for goods to be delivered and are now able to get the product to the customer without issues. Since the new system integrates the supply chain with the other aspects of the company such as the financial system it again cuts down on paperwork, which leads to less confusion during communication between both parties. This means less mistakes and with a decrease in mistakes with ordering and finances it greatly increased the efficiency of the supply chain. With efficiency comes more “goodwill” to customers who don’t have to wonder if the Starbucks around the corner from their home will have their favorite coffee or not. With more “goodwill” comes customer loyalty which will in-turn lead to more return customers which will increase sales annually. Another advantage of the system is that it reduces operating and supply chain costs. Operating costs are decreased due to the fact that less personnel is needed to operate the entire system effectively. With everything being computerized and all information being available on the system there is no need for certain types of employees, thus cutting salary costs. Since all of the information and documents are computerized there is no need to paperwork in-turn cutting back on overhead costs and with the amount of paperwork that Starbucks could be using this is a huge amount of overhead costs that is removed. Even with the personnel cutbacks the system is still able to run smoothly and efficiently. All aspects of the company are integrated into one system, streamlining processes that used to take a long time to go through many people with no sense of the timing that was needed to effectively order, manufacture, and supply stores with the required goods.With the accounting system being integrated into the system Starbucks is able to maintain a watchful eye on all transactions that occur allowing them to see what is costing them too much and need to make improvements on. The system combines all of the necessary information into one easy to comprehend document for managers and employees to read and evaluate. With the information in one place is it easier for managers to make decisions on what needs to be done now and in the future.Another advantage of this system is that it was specifically designed and implemented for the use of Starbucks. This means that it was developed for the ease-of-use by employees of the company. Again allowing for timely transactions within the organization. The system was designed to easily be manipulated in the future in the event that the system needs more applications or updates are required. This will cut down on future costs of the system and again cutting back on overhead. ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download