Trade off under capital pressure in the ERP case o

2022-09-23
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NEP pump ERP case: trade-offs under financial pressure

on the one hand, we hope to reduce costs, eliminate waste and improve the efficiency of capital use with the application of informatization; On the one hand, the capital is already very tight. Is the limited capital the first to solve the current capital problem, or the first to carry out information construction in the future? Like many private enterprises, Hunan Naipu Pump Co., Ltd. (hereinafter referred to as Naipu pump) is difficult to choose between solving immediate problems and focusing on long-term development. Finally, NEP pump chose to go to ERP first. Is this a wise choice

the decline in profits brings management problems

we will get better results

Nippon pump was founded in 2000, mainly producing vertical diagonal flow pumps, horizontal split pumps, diesel engine fire pumps, vapor-liquid mixed transportation pumps and other types of pumps. Good market positioning and high-quality products have helped Naipu pump industry achieve rapid growth. In order to adapt to the rapid growth of business, Neptune moved into a new factory with a larger area and more advanced production facilities in 2007. This shows the rapid development of NEP pump industry

however, before moving into the new factory, gengjizhong, general manager of Nippon pump, had to face a severe challenge - the management problem of Nippon pump had affected the development of the enterprise. "In the past, we were in charge of logistics in the production department and warehouse in the financial department." Geng Jizhong commented that at that time, the rights and responsibilities of Nippon pump industry in management were not clear

"when the company was just established, several of our brothers threw aside the iron rice bowl of state-owned enterprises, and their hearts were very united. It was easy to manage our employees. Now we have more employees and a large amount of business. If we manage according to the previous model, it will affect our business." Geng Jizhong said

our customers are mainly in metallurgical steel, petrochemical industry, power plants, mining, military ships, municipal irrigation and drainage, port terminals and other industries, and our product sales are mainly achieved through bidding. In the process of bidding, quotation is a very important link - if the price is higher, you may not get an order; If the price is lower, it may lead to the final loss of the order. However, due to the fact that many products are customized and lack of effective means and tools, it is often difficult for Neptune pumps to accurately calculate the cost price of an order. In the process of quotation, we can only quote based on experience. Tang Wenping, director of Nippon pump technology center, revealed that in the past, Nippon pump often lost orders due to too high quotation or lost money after winning the bid due to too low quotation

even if the customer places an order after winning the bid, it is difficult for Nippon pump to control the cost of the order - because there was no special department to control the cost in the past. This problem does not appear when the profits of the whole industry are relatively good and orders can leave a large profit space. With the continuous intensification of market competition, enterprises have to reduce the quotation to obtain orders. Sometimes after the order is delivered, they find that the order does not make money at all, or even suffer losses. But it's too late to say anything at this time

cost control is a difficult problem, and the control of delivery cycle is another difficult problem. Tang Wenping told that in the past, Neptune pump industry completely relied on manual production, and could not reasonably arrange production according to the actual situation of the order - before the delivery date, it was difficult for relevant personnel to understand the accurate progress of an order production. If the delivery time is approaching and it is found that the order has not been completed, Nippon pump has to rush the production progress. Sometimes the production schedule is too different, or several orders are approaching the delivery date at the same time, which will cause delivery delay, and Neptune pump has to pay the price of reputation for this

in addition, the assessment of supporting manufacturers is also a problem for Neptune. NEP pump produces many parts and components, and many non critical parts and components are handed over to supporting factories for production. Many suppliers provide products with quality problems, or the timeliness of delivery cannot be guaranteed when the constant temperature timer shows the required constant temperature time. However, since Nippon pump did not record these situations, it was unable to conduct effective evaluation on suppliers with microcomputer full-automatic control. Therefore, the waste rate of supporting manufacturers makes the number of parts insufficient or the delivery date too late, which often disturbs the normal production order of Nippon pump

dilemma under limited funds

so before moving into the new plant, gengjizhong hopes to standardize management through ERP, like many similar private enterprises in Changsha. However, Geng Jizhong faced a dilemma at this time. As a fast-growing enterprise, Nippon pump has a great demand for capital. Like many private enterprises, it is very difficult for Neptune pump to obtain bank loans. "If we have sufficient funds, our business will certainly do very well." Geng Jizhong told me so. A lot of money has been spent on the construction of the new factory. If a set of ERP system is installed at this time, it will undoubtedly make the already tight capital of NEP pump industry more nervous. Moreover, Geng Jizhong learned from his peers that the implementation of ERP may temporarily affect production. This will be a big challenge for the Neptune pump industry, which was originally able to barely complete the order on time

Geng Jizhong learned from the neighboring enterprises that have been on ERP that the application of ERP can help enterprises dynamically grasp the state of enterprise management, reduce inventory, and provide complete sets of products. As a result, it can undoubtedly help Knapp pump industry reduce the financial pressure. It is worth mentioning that in Nippon pump industry, the low rate of complete sets of products has always been a difficulty in management. Because a finished product requires a lot of raw materials, if the calculation of raw materials is not accurate and the complete set rate of the product is not high, it will be found that one or some raw materials of the product are insufficient in the late production of the order, which will affect the normal delivery of the order; Or because the quantity of one or some raw materials is too large, it leads to the overstock of inventory

later, Geng Jizhong chose ERP - after all, NEP pump industry is an upstream market of the industrial chain, and it will also usher in a period of high-profile development. As an enterprise focusing on the future, its management must go to a higher level. "Even if I didn't go on ERP at that time, I will go on it in the future." Gengjizhong later said

as a result, Nippon pump convened five or six ERP suppliers for bidding. After a comprehensive consideration of the after-sales service and cost performance of these suppliers' ERP products, Neptune pump chose Yifei ERP provided by Digital China as its information construction platform. For Geng Jizhong, another key reason for choosing Yifei ERP is the recommendation of the boss of an enterprise in Changsha that has applied Yifei ERP. In addition, many successful cases of Yifei ERP in Shandong pump production industry have also added confidence to Neptune pump industry. At the end of March, 2008, Knapp pump officially began to implement ERP

hold meetings every day to solve implementation problems

however, it is not easy for private enterprises such as Neptune pumps to use ERP. To this end, Geng Jizhong organized relevant personnel to visit and study some leading enterprises in Changsha, such as Sany Heavy Industry and Yuanda air conditioning, comprehensively sorted out the process according to their own enterprise characteristics, established a planned logistics center, and clarified the rights and responsibilities of each department

unlike many private enterprise bosses, Geng Jizhong is very gentle. He is a typical Confucian businessman, and there are not many coercive measures in ERP promotion, but he has his own methods. During the implementation of ERP, Geng Jizhong held ERP working meetings with the deputy general manager of production, deputy general manager of marketing and the backbone of the information center of Nippon pumps almost every day before and after work to raise the problems in the implementation of ERP and jointly discuss the solutions to these problems. At the meeting the next day, they first brought out the problems of the previous day to see how they had been solved

it is easy to mobilize the enthusiasm of the management in Neptune pump industry, but it is not easy for ordinary employees to quickly accept the working mode of the system. It is understood that although NEP pump has conducted a lot of training for employees, due to their lack of attention to ERP, problems often occur in the actual operation process, affecting the effect of system application

therefore, meeting to solve problems is one aspect, but for the long-term implementation and application of ERP, developing a scientific and reasonable system to mobilize the enthusiasm of ordinary employees is the long-term plan. Under the guidance of Digital China implementation consultants, Neptune pump fully recognizes this. During the interview with Nippon pump, liujialin, the backbone of ERP implementation of Nippon pump and the Vice Minister of technology and quality department, was working on the reward and punishment system for ERP application. According to this system, in the future, in NEP pump industry, employees must pass the ERP related assessment before taking up their posts, otherwise they will be transferred or laid off. The establishment and implementation of the system will play a good role in promoting the correct application of NEP pump ERP

cost control achieved initial results

at the end of July 2008, the ERP of Nippon pump was officially launched and applied. Although Geng Jizhong was still distressed that the implementation of ERP had affected the production progress of Nippon pump to a certain extent when he visited Nippon pump in August, he believed that ERP had helped Nippon pump gradually standardize management and played a certain role in cost control. This is mainly reflected in the following aspects:

first of all, ERP helps Neptune pump industry reduce the backlog of inventory. In the past, due to inaccurate inventory and lack of real-time change data, it was difficult for relevant personnel to obtain accurate inventory data. Therefore, when purchasing materials, purchasers often place orders first, regardless of whether there is inventory or not. In this way, it is easy to squeeze inventory. Taking advantage of the opportunity of ERP, Knapp pump has thoroughly sorted out the coding and cost of materials. Using the real-time inventory data provided by ERP, buyers can purchase materials according to the existing inventory, which greatly reduces the inventory backlog. In addition, using ERP to improve the completeness of products is also a key factor for NEP pump to reduce inventory backlog

secondly, the system can help Neptune pump provide useful support when bidding. After getting the bidding document, Knapp pump can expand the bill of materials in the system according to the product requirements in the bidding document, and automatically calculate the basic cost. According to the cost, history and market conditions, Neptune pump can make a reasonable quotation, avoid the quotation lower than the cost price, and improve the bid winning rate

thirdly, ERP can help Neptune pump industry reasonably arrange production capacity. ERP has changed the original manual production scheduling of Nippon pump, and the system can automatically arrange production. Once the production capacity is found to be insufficient, many jobs can be outsourced. In this way, the probability of delayed delivery can be greatly reduced

finally, the data provided by the system can effectively support the assessment of Neptune pump industry on supporting manufacturers, so as to more effectively ensure product quality and delivery time

nevertheless, Geng Jizhong believes that ERP is only one of many methods and tools in enterprise management. A good enterprise should make full use of various management methods and tools. (end)

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