Enterprise Resource Planning (ERP) System Case Study

Discussion Questions

  1. What motivated Skullcraft to explore ERP even though the business was comprised of just 26 employees?

Solution

The Enterprise Resource Planning system is an integrated system that helps the company manage its resources. Inventory procurement, finance, supply chain human resource, etc. are just a few of the sources that an ERP can help manage.

Even though the company was comprised of only 26 employees The ERP system will improve the management of resources, which isn’t restricted to human resources only.

The following information will support the introduction in ERP: ERP system:

  • The company competed with Sony on the U.S. headphones market with sales up to $37 million.
  • The company saw a 200-300 percent annual growth rate.
  • The company was required to handle massive amounts of transactions.
  • The finance department used Excel spreadsheets as well as Quickbooks for managing the bookkeeping.
  • The products are distributed widely.
  • No tracking of products through the supply chain until ERP was introduced.

In essence, Skullcraft was a small company with operations that were comparable to those of a large enterprise. So managing resources became increasingly complicated as the business grew in sales. In addition, investing in an ERP platform would assist the company in managing its resources efficiently. Additionally, because this ERP system was hosted entirely it did not have to maintain an additional ERP infrastructure, which is a plus for the company.

  1. What factors led Skullcraft to select ByDesign by SAP? ByDesign?

Solution

SAP’s ByDesign was an innovative system that met Skullcraft’s every and every requirement. After having a look at several different systems, Beth Siron chose ByDesign due to several reasons.

  • ByDesign from SAP ByDesign was a completely system-hosted solution, meaning that it did not require additional infrastructure for information systems in order for implementation by Skullcraft. The company would utilize the ERP system via the internet, which made it simple for every department to access it anywhere.
  • It allowed big business methods for managing inventory, financing customer relations, supply chain management, etc. in a format that was easily accessible for small companies. This was the perfect solution for the small business with an annual growth rate between 200 and 300 percent.
  • It allowed Skullcraft to track its products throughout its supply chains.
  • The ERP system has allowed the company to anticipate the demand for the future.

This software could do the same things a large corporation’s Information System would do but without the infrastructure and staff to oversee it. The features were ideal to Skullcraft as it was a smaller company that had transactions comparable to an enterprise of the size.

Critical Thinking Questions

  1. What do you think Skullcraft managed to keep the small size of its staff while growing production by 200 to 300 percent per year?

Solution

Rick Alden saw a unique business opportunity to sell high-end innovative headsets to Skiers as well as Skateboarders. It was the very first to allow users to switch between music and cell phone conversations via headphones.

The main reason for the massive expansion was the marketplace and the distribution channels. Skullcraft initially targeted niche stores for skate and ski, and later, larger retail chains. Specialty retailers attracted large quantities of extreme sports fans that brought Skullcraft onto the map of the world of headphones.

With only 27 employees on the payroll, the business could effectively handle its business operations specifically manufacturing and distribution. It is not uncommon for companies to achieve the highest growth rate for this small number of employees. If the operation is effectively managed and managed, the growth rate can be increased without investing in more resources.

The business could have outsourced the production which is understandable since only a small number of employees can produce and keep up with such huge demand. Furthermore, the company could have planned the items to be picked up at the factory of the manufacturer and then dropped off at the specialist retail stores. By effectively managing the flow of products and arranging the flow of goods, the company should be able to boost its production by 200-300 percent using only 26 employees.

  1. Do you believe Skullcraft is unique in its size and demands? What other businesses could your mind think of to would fit to Skullcraft model?

Solution

It’s not true, Skullcraft is not unusual in its demands and size. It is not uncommon for a company to enjoy an impressive growth rate, even though it is a small company. Small businesses often provide services to a lot of clients. Skullcraft’s Rick Alden realized an exceptional business opportunity that turned into an immense success and made the company grow at a rate of between 200 and 300 percent per year. The company was also capable of effectively managing and integrating operations which resulted in massive sales and the company’s human capital to a minimum.

Other companies that fall under the Skullcraft model include:

  • IT companies like GoDaddy that provide domain-related services to both large and small companies can provide many customers despite their size. The development of internet-based services makes it possible for these firms to remain small while serving large. So the investment in an ERP system will allow GoDaddy to run its operations more efficiently.
  • Freight Forwarding companies consolidate goods products from different customers into one large container. This reduces the cost of transporting small quantities of goods. They employ the infrastructure of big companies and can manage their operations from their desks. Furthermore, an ERP system helps freight forwarders track items throughout the chain of supply and manage the customer relationship.
  • Small logistics companies manage the operation and utilize the resources of other companies to move the items. Their small size requires massive quantities of resources. Furthermore, ERP for logistics companies can help employees track the products, control the finances, manage the relationship with the customers, etc.
  • Architecture firms, medical firms designing and development companies, and a myriad of other companies in the IT industry aren’t huge, but their requirements are immense.

Therefore, Skullcraft’s size and requirements aren’t uncommon as it is typical for a company to be small while serving many customers that will eventually expand their requirements.

Group Members

Dhruv Shah

Praveenchand Nair

Abhay Khurana

Brahamdeep Singh

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