By Pat Garrehy, Rootstock Software, Founder and CEO
There have been a series of articles on this subject and the topic is covered in almost every software manufacturer’s PowerPoint presentation to a new prospect. There are many reasons, usually written in upper level business-speak about growing revenues, creating business efficiencies, aligning the various departments of a company into a cohesive unit and so on. Lofty goals all.
The truth is that every company has a unique set of circumstances and will require its own way to justify a major project. In general, a good approach is to look at the investment from both a quantitative and qualitative perspective.
Let’s begin with the quantitative. The first thing most companies examine is how much inventory reduction they will obtain with an effective ERP system. Industry analysts generally agree that between a 20 to 30 percent reduction is achievable with improved management of raw material, parts, WIP and finished goods. Even if the incremental improvements are only 10 to 15 percent, this still results in significant savings.