No doubt the success of the SAP R/3 ERP solution has been quite phenomenal. However, there is widespread misunderstanding that ERP equals production scheduling. This is not the case. The fundamental ideas behind ERP apps have a broad range of applicability.
As consumers, most of us are oblivious to the processes that go into the products we buy and use every day. We are also oblivious to the raw materials used to make them. But the acquisition of raw materials, the accounts payable and receivable processes, and the manufacturing and distribution processes provide the basic building blocks for virtually every commercial product.
Let us consider three companies that have built their business around ERP: Microsoft in the software industry, Owens-Corning in the building supplies industry, and Colgate-Palmolive in the consumer products industry.
In general, ERP software is used for divisionwide or enterprisewide business-critical purposed and involves significant capital commitments by customers. Microsoft spent ten months and $25 million installing SAP R/3 to replace a tangle of 33 financial-tracking systems in 26 subsidiaries. As a result, Microsoft puts its annual savings at $18 million, and Bill Gates calls CAP “an incredible success story.”
Colgate-Palmolive: The ERP Benefits Are Tangible
ERP implementation has become the foundation of Colgate-Palmolive’s business. The corporation is the world leader in oral-care products (mouthwashes, toothpaste, and toothbrushes) and a major supplier of personal-care products (baby care, deodorants, shampoos, and soaps). Palmolive is a leading dishwashing soap brand worldwide, and Colgate is a top producer of bleach and liquid surface cleaners (Ajax) outside the United States. The company’s Hill’s Health Science Diet is a leading premium pet food brand worldwide. Foreign sales account for about 70 percent of Colgate’s total revenues.