Reference no: EM133045919

Situation:

The Hawkins Electronic Manufacturing is currently faced with an inventory inaccuracy problem. The company purchased a new ERP Inventory management module six months ago. Before that, the organization had used three SAP ERP modules: ERP Accounting, ERP Production and ERP Sales. The firm did not have a lot of cash to buy another SAP ERP module, so it waited for three years before purchasing an ERP inventory management module from Enterprise Applications (EA). Jimmy Hawkins, the CEO of the company was very delighted that the software was affordable, Also, the CEO of Hawkins was impressed that the EA's software and business analysts were able to implement the software in only one day, instead of four days. EA had customers in a few industries, the main ones were the Hyden Timber, Carlo Wood Manufacturing and Elite Furniture Creations.

This difficulty stemmed from the fact that while the ERP Inventory management, Accounting and the ERP sales modules accurately recorded all the purchases of the company, the systems did not record units that were shipped to or picked up by customers at the warehouse. Hence, the ERP sales module from EA, that was used by the remote sales office, kept "selling" items to customers even after the warehouse had already run out of stock.

There was much controversy about this. The CEO was exploring a change to the work process. Should the warehouse call or email the sales department when they run out of stocks? Or should the sales department call or email the warehouse every morning to see what is in stock? That way, the sales department would know when to stop selling out of stock items.

Question: What would you recommend? What do you think is causing the problem? Are there alternative solutions which might be more effective?