Lynn technology products is a manufacturer of electronic components for the computer and mobile industry. It is a relatively new company that grew out of a legacy Corporation that made manual typewriters and other mechanical devices that used to be used by office personnel and others. Lynn technology operated on a mainframe system inherited from the previous company and used many other local hardware systems to perform many of its other business functions. For the past few years, the company operated profitably and efficiently and had no desire to change systems. However, due to the pandemic and other economic slowdowns, and increased competition from foreign competitors, the company was forced to improve the efficiency of its business operations.
Ron Paddington, the new purchasing manager, was responsible for ordering raw materials and making sure they were delivered on time to meet production requirements. He used custom software in order to forecast future needs based on past demand patterns. Although this worked most of the time, Ron often found himself scrambling to meet large customer orders at the last minute and was forced to expedite many orders to meet production needs at much higher costs. He felt that the cause was poor communication between sales and purchasing. The production and sales forecasts were coming in regularly, and the forecasts proved to be inaccurate by the time Ron was placing orders.
Additionally, he was not getting good communications and cooperation from suppliers, which would have helped him determine lead times and product pricing. Ron proposed a new software system that would better integrate supplier information. However, senior management turned down the proposal due to a feeling that the return on investment was not there.
Lynn technology products faced cash flow issues as well. It took up to three weeks for the accounting department to process invoices and often email corrections with sales management. Because both departments used different systems to manage customer accounts, some of the data was redundant and inaccurate. Many times, customer accounts were updated in the sales department, but not in accounting. These and other issues went unnoticed when times were good. However, the recent economic slowdown revealed potential problems with the current business operation as Lynn technology began to run short on cash.
Recently, one of Lynn technology’s biggest customers started requiring all of its suppliers to integrate their software systems to improve information sharing and further improve order visibility. The large customer had recently implemented a new ERP system from a major provider and encouraged all of its significant suppliers to do the same. Suppliers could implement middleware-type software to integrate operations. Suppliers were given one year to make changes if they wanted to continue doing business with this large customer.
The CIO of Lynn technology was well aware of the issues facing the company. He knew that it was essential to take action that would improve communication and information sharing. He also knew that the mainframe system in place was outdated and inefficient. He was also aware of the constraints that purchasing was facing and how much it cost the company. Thanks to the new request from the large customer for further integration, it is evident that any ERP system seems like the only viable solution. However, the economic weakness in a limited amount of available financial resources made such a large capital outlay a risky investment for the company.
The body of the report addresses Questions 1-4 in a clear, concise, and cohesive manner. This report should be business-like, organized, and methodical. Please note: each question should become a section title.
- Describe the trade-offs of implementing an ERP system in the company versus simply buying best-of-breed software and middleware to enable integration. For the trade-offs identified, propose potential solutions, and analyze each of them. Any given alternative solution may address multiple issues.
- If the company goes the ERP route, describe some of the implementation impacts for both customers and suppliers. Be specific and describe why you think these impacts will occur.
- If the company chose to stay with the current system, describe some of the potential consequences of the future. Be specific and describe why you believe these will be potential consequences.
- Based on the company’s business nature, the industry, and the current environment, what would you recommend Lynn does? Support the recommendation with facts and sound reasoning.