Inventory and sales data are available in real time rather than with a one-day lag in the
previous systems.
Accounts receivables for comparable product categories and payment conditions have been
reduced.
Significant productivity gains, especially in the finance and the sales departments, have been
realized.
The time reduction in the order-to-delivery process mainly stems from reengineering of the
previous serial process and reductions in the time needed to check availability of products and credit
status of customers for sales orders. This has been done manually before the implementation of the
ERP system and its integration with the B2B platform and is now completely automated (see Exhibit
7 for a detailed comparison of the order fulfillment process before and after the ERP implementation
and its integration with the B2B platform e-bridge). This process originally took about 1.5 hours and
was reduced to five minutes after automation. In addition, opportunities for haggling have been
eliminated by introducing the online-ordering facility (in addition to eliminating the need to
manually enter order data in Digital China). Also, using SAP’s warehouse management module
further reduced order-to-delivery time since items could be quickly located in the warehouse
whereas previously locating items frequently involved long searches since no central record was kept
for item locations. Order and item location information is now directly sent to hand-held devices of
warehouse operators.
The “Old MIS” supported the creation of financial statements, albeit only for each legal entity
individually. Thus, consolidating financial statements for the whole group involved canceling out all
transactions between group members in order to avoid double counting. This labor-intensive process
was automated by the ERP system resulting in a significant shortening of the financial closure
process. As financial statements are used for purposes of management control, this reduction
substantially improved top management’s ability to selectively reign into subsidiaries operations if
that is deemed necessary.
A key advantage of using the ERP system is its ability to tightly integrate data across functional
modules. For example, the moment an order is accepted, the required amount in the warehouse is
assigned a different status (‘reserved’) thus preventing overlapping orders for the same items.4 The
previous system would provide one day-lagged inventory data (which, compared to most Chinese
companies, is already quite exceptional). This enables the business units to act closer to market
changes. For example, sales employees can immediately see whether sales targets have been achieved
rather than being delayed one or more days which helps them take action immediately. On the
procurement side, product managers will place orders which reflect current demand and inventory
status more accurately. Shi Hongwei, product manager in the PC peripherals department, comments:
According to my experience, I can make ordering decisions more timely than before the ERP system was applied. For example, if I need to place the order today, the latest information I could get [before] was yesterday’s data. But I didn’t know what happened yesterday and on that morning. Now I can get information from the beginning of the month to now, including how many orders have been placed and how many customers I have. From this information I can decide the market channel and what customers need. So I can make decisions more efficiently. So real time [ability] is the most attractive.
Evaluating the benefits of the system in terms of accounts receivable and inventory levels is less
straight forward since market conditions have changed significantly over the past year. On the one