Manufacturer shelves legacy system for ERP upgrade

Australian electronics manufacturer GPC Electronics has set its sights on international expansion, replacing a legacy material requirements planning system with a modular enterprise resource planning (ERP) implementation that will allow international customers to place orders online.

Christopher Janssen, managing director of the company, based in Penrith in Sydney's outer western suburbs, took an active role in the planning and decision process, which he said was set to change the company’s market opportunities.

“We do contract manufacturing and have a large number of components as well as numerous lead times,” Janssen said. “Our ERP system must manage the entire supply chain in addition to providing a consistent and integrated platform.”

According to Janssen, GPC chose a SAP R/3 and mySAP solution which will be implemented by IBM Global Services.

“After approaching a number of software vendors in the manufacturing space we put out a broad tender because many of the vendors often changed ideas about what best suited our requirements. Initially we didn’t consider SAP,” Janssen said. “Our relationship with IBM began when we asked for help selecting a vendor.”

GPC narrowed its choice to three vendors and undertook functionality assessments.

“We asked for demonstrations on functionality and even visited sites in the US and Asia to get a better understanding of fitness,” Janssen said. “SAP has a richness of functionality, is a rigid system, and generally does a lot more than we expected.”

Janssen said although the implementation is “in the millions of dollars” it is price competitive and he expects to see ROI in two to three years.

“ROI will be in the form of productivity improvements and the opportunity to increase revenues through better customer management,” he said.

The implementation will include SAP's financials, project system, materials management, warehouse management, sales and distribution, workflow, quality management, and production planning modules. This modular architecture also allows additional applications, such as CRM, to be integrated later.

Along with the software package selection process, GPC also looked at service providers before committing to the contract.

“We considered three; however, IBM had the broadest offering and good experience with SAP,” Janssen said. “IBM’s willingness to adapt to what we need as well as design and document our processes ensured the partnership progressed through each planning stage.” IBM Global Services Australia and New Zealand's commercial business division principal, Michelle Bendschneider, believes the final solution was the best for GPC’s needs.

“The decision to implement SAP wasn’t the result of a feature shoot-out between different products,” Bendschneider said. “After partnering with GPC at the decision-making stage we took a strategic view of supporting growth and collaboration.”

For an ERP implementation to be successful there must be a clear and tangible business goal, she stressed.

“Understand the case for change and that ERP shouldn’t be treated as an IT project as it requires strong executive ownership. This approach allows measurement of value as well as comparison of products.”

It is also important to make growth, integration, and collaboration priorities over user experience, she said.

“Don’t get bogged down with individual data fields and how they are presented.

“Useability is important but not crucial to the success or failure of the system," she said.