Reference no: EM132235497

Business Problem: The order fulfillment team has been using several legacy technology systems to manage inventory and distribution. The current systems do not work together, requiring redundant information input and processing. Because of the redundant processes, work is duplicated requiring multiple data entry points and sometimes results in inaccurate and irreconcilable data. There is a constant overage or shortage of supply due to the time it takes for data to get from one point to another. This causes unhappy customers and inventory carrying costs that could be avoided.

Project Description: Replace legacy order fulfillment technologies by implementing a SCM system.

Project Cost: The project will cost approximately $1.2 million including infrastructure and resources to complete the implementation and $250,000 annually to support and maintain the new system with a ten-year lifecycle for the system.

Project Benefit: It is estimated that the implementation of a supply chain management system will improve the order fulfillment processing time and reduce inventory-carrying costs. Implementing the SCM system will also enable the retirement of several legacy systems. Estimated annual cost savings are:

Data entry staff reduced from 10 FTE to 8 FTE = $100,000/yr savings
Reduction in inventory carrying costs = $300,000/yr savings
Improved order fulfillment = 10-20% decrease in order to delivery time. This will improve customer satisfaction and retention
Improved data accuracy
Legacy system maintenance retirement savings = $100,000/yr