Failure in ERP can cost you fortune

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Categorized as ERP

Without ERP planning, failure is invitable

When it comes to managing different internal processes of an organization, ERP plays a crucial role in this sector. This makes the entire workflow run smoothly without any interruptions.
If ERP does the work as required by the company’s objectives, this works out perfectly. If it doesn’t, then the company is liable to face a huge amount of loss as result of failed ERP.
No wonder, this makes it vital for the company to select the right ERP system.
Selection and implementation of a new software in the core part of the business is no doubt an important part for the organization.
A lot of research and analysis needs to be carried out in order to arrive at the decision of selecting a software.
If proper guidelines are not followed for selction of an ERP system it can be very disastrous for the organization.
Unfortunately, immunity is not available for any industry to avoid the devastating effect of the ERP failure.

Let’s look at the examples of ERP failure that occurred with renowned companies.(data reference- cio.com)

    • Nike supply chain blunder ( X Sometimes you can’t do it )In the year 2000, Nike invested $400 million in upgrading their supply chain and ERP system.
      With the new upgrade, they implemented a new demand- planning solution.This newly launched strategy backfired and struck them with a $100 million in revenue losses.
      What was the cause of this extreme loss?
      The strategy was implemented without proper testing that led to such downfall in the growth chart.
      This scheme instead of providing assistance in matching the supply and demand cycle of Nike, hiked up the sales of low selling products than the high selling ones which lead to crash in supply chain.
    • Hershey’s management disaster (a bitter experience)The hershey’s faced a 8% stock dip in the year 1999 during the halloween season.
      The chocolate manufacturer gave a bitter experience to the people on the day of Halloween, which was caused as a result of failure in delivering $100 million worth Hershey’s chocolate kisses.
      The cause of this bitterness was failure in ERP implementation by Hershey’s.
    • Hewlett Packard in a frenzy management situationWe must have experienced small errors or issues in the implementation process of the new system.
      The failure in the system occurs when these minor issues pile up to cause the mega blunder.Hewlett packard faced a frenzy situation like these in their management part.
      Transfering the company’s North American division cost $160 million to HP in lost revenues.The reason for this ERP failure was an implementing issue not the system error as stated by Hewlett Packard.

“By observing cases of such renowned brands, it is clear that ERP implementation without proper measures will give you a tough time.”