SUMMIT ELECTRIC LIGHTS UP WITH A NEW ERP

SYSTEM
INTRODUCTION
Summit Electric Supply Co., Inc. engages in the wholesale distribution of
electrical equipment,supplies, and solutions for the electrical
professionals in the United States and internationally. This company is
one of the top wholesale distributors. Summit obtains finished goods
from manufacturers and sells them to electrical contractors working on
projects ranging from small construction job tosophisticated industrial
projects. This company was known as middle on the supply chain, so it
must be able to handle high volume of transactions and swift inventory
turnover. However, the information built in the 1980s could not keep up
with the business growth, it could only handle a fixed number of
locations and limited the range of numbers that could be used on
document.
Summit is dedicated mission to:
Serving the customers by adding superior value with industry expertise,
innovative systems and commitment to them;
Serving the associates and their families by providing opportunities for
associates to grow,advance and secure a prosperous future;
Serving the suppliers through mutually rewarding relationships; and
Serving the communities in which we live and work.
Vision:
To be the best place to work and to do business in the electrical
industry, period.
PROBLEM OF STATEMENT

1. Which business processes are the most important at Summit Electric

Supply? Why?
2. What problems did Summit have with its old systems? What was the
business impact of those
problems?
3. How did Summits ERP system improve operational efficiency and
decision making? Give several
examples.
4. Describe two ways in which Summits customers benefit from the new
ERP system.
5. Diagram Summits old and new process for handling chargebacks.
CASE SUMMARY
Summit electric supply is one of the top wholesale industrial electric
distributors in US. The product range is from basic commodities to
sophisticated electrical components. It provides many value-added
services that help electrical contractors purchase electrical supplies
efficiently. Founded in 1977 in Albuquerque, New Mexico and has grown
very quickly. Unfortunately, its old legacy information system could not
keep up with the business. The old system could no longer process its
nightly inventory and financial updates. Summit needed a system that
could handle a very large number of SKUs. Changed to new system
ERP which is SAP that would require improve its business process
andthe way people worked.
SUGGESTION AND ACTION
1. Which business processes are the most important at Summit Electric
Supply?
Answer
The company is known as a one of the top distributors, Supply chain
management played the most important business process at Summit
Electric. Supply chain management (SCM) is the management of the

flow of goods. It includes the movement and storage of raw materials

work-in-process inventory,and finished goods from point of origin to point
of consumption.
Why?
Answer
The reason business processes are the most important is both
manufacturers and end users rely on distributors to efficiently bring
products to market. As the middle men of the supply chain,distributors
thrive on high transaction volumes and swift inventory turns. Distribution
industry hassome unique aspects that drive its business. The company
has a very large number of SKUs (Stockkeepingunits) and transaction
(very short lead times). Inventory distributed in various models,including
at customer job sites. In the distribution business, the lead times for
fulfilling an order can be only minutes.
ERP System
An ERP System is a packaged business software system that enables a
company to manage the efficient and effective use of its resources. Its
automated and integrated the majority of an organizationsnbusiness
process. It is functionality in sales and distribution, materials
management and financials.Moreover, it share common data and
practices across the entire enterprise, produce and assess information
in real-time environment.
SAP Application
SAP is a core ERP application. Its the best practices function in sale
and distribution, materials management, Human Resources and
Financials and its knowledge in distribution business. SAPs Net Weaver
support Summit Electronic more organize and be able to control how
much was needed to be produced and distributed. Its useful for

business intelligence reporting and analysis. it helped the company to

evaluate the profitability of its sales channels, using what the solution.
Batch Management
It is a software that treats a wire reel a batch rather than single as single
products. It used to cater high demand for wires and cable products. For
examples- every time customer buys a length of wire, the length can be
entered into the system to track how much of the batch was sold. The
batch management process removed the problem of maintaining the
inventory of such product.
2. What problems did Summit have with its old systems?
Answer
Summit had facing problem with its old system where the system had
reached their breaking point. The old system could no longer process its
nightly inventory and financial updates in the amount oftime that was
available. For example, it separate or different systems for sales and
purchase order and back-end reporting- integration between the system
was done manually in batches. The system could only handle a fixed
number of locations and limited the range of numbers that could be used
on documents. Summits information system had to use the same range
of document numbers over again few months. Not able to handle the
volume and complexity of the companys chargeback agreement and
reporting capabilities were limited. Gathering and reviewing invoices tool
an entire month invoices 2-3 months old.
What was the business impact of those problems?
Answer
The business impact from the problems was that the system was not
able to keep up with the fast
growing business. It limited the business as it was only able to handle a
few range of numbers and

location at a time. It caused of delays and time consuming task that was
not needed to take as much
time as it did in its business operations.
3. How did Summits ERP system improve operational efficiency and
decision making?Give several examples.
Answer
ERP improved operational efficiency and give scalability and the ability
in Summits business process,especially in supply chain areas like sales
and distribution, inventory management and financial reporting systemas the company expected strong growth in these areas.Running more
frequent inventory updates.Its running smaller and frequent inventory
update throughout the day, instead of a night-which caused a delay. New
system provided accurate information of shipping order, which Summits
was able to ship immediately. Adapting the inventory tracking process.To
replenish wire and cable, the ERP batch material management identified
the customer purchase amount, length of wire and product
manufacturer. Each time a customer buys a length of wire, the length is
entered into the system to track how much of the batch was sold.
Changing how inventory is managed at job sites.To secure inventory for
special customers, with long term projects, Summit created a parentchild warehouse relationship in ERP system to secure the materials in
inventory as well as on premises.
Business intelligence
To make a better manage its finance and ordering system, Summit
implemented the SAPs/NetWeaver BW data warehouse and business
intelligence. By integrating the NetWeaver, Summit was able to analyze
the profit of each sales person, manufacturer, customer and branch.
Using SAP software, Summit was able to improve its ROI, by automating
sales tax and chargebacks. The SAP/Paybacks and Chargebacks
application was able to identify the billing activity, if there was a

chargeback, the SAP system would automatically submit the information

to bill the chargeback- increase its chargeback claims of up to 118%.
Summit decision making for implementing the new ERP system was
based on the growth of the organization, the complexities of processing
orders, analyzing finances and back and reporting. Once the new
ERP/SAP was in place, Summit management was able to focus on sales
and orders and quotes, supplier performance and delivery schedule.
The new SAP/ERP has allowed Summit to run its operations with
flexibility and allow the SAP to operate efficiently. The new ERPsystem
allowed management to have a greater vision for decision making and
managing its operations.
4. Describe two ways in which Summits customers benefit from the new
ERP system.
Answer
Firstly, customer can rely on the company for their needs and productsthe company now more efficient. The company wants that customers to
feel that they can provide that they have produced products the
customer want and sent to them in short time period.
Second is to accommodate large customers with long term job sites.
SES sets up temporary warehouse on site to supply these customers
with its electrical products. Create parent child warehouserelationship
to be able to work with customers. If the SES office has more than a few
temporary onsite warehouse, the warehouse can be controlled like
subparts of the main SES warehouse. It helps to
prevent anybody from selling the consigned inventory into the
warehouse.
5. Diagram Summits old and new process for handling chargebacks.
Answer
Chargeback is the return of funds to a consumer. The chargeback
mechanism exists primarily for consumer protection. For the distribution

company, chargeback occurs when the supplier sells a product at a

higher price to the distributor than the price they have set with the end
user.
Old process
For handling charger backs had flaws in it where the company was
losing money and sometime barely making any profit. Processing
chargeback have to compare the sale to contract. A distributor can have
up to hundreds maybe thousands of contract. SES need to identify the
chargeback and which manufacturer with enough documentation of the
contract or a lot of manual work. SES need go
through the customers invoice with detailed manufacturers identified and
put the chargeback in Microsoft Excel.
New process
For handling chargebacks had flaws more efficient. It automatically
review Summits billing activity for
the day. All chargebacks agreements loaded in the SAP system by the
end of every day. There is a
match in the system and they are able to claim. New process is able to
create a separate chargebacks
document outside the customer invoice and able to process more
quickly with review in the same day.
SES increased its claim by 118% over the old system.