ERP FAILURE

W W GRAINGER
 INTRODUCTION
In its basic definition, ERP (Enterprise Resource
Planning) is an enterprise-wide information system
that integrates and controls all the business
processes in the entire organization. According to
Nah and Lau ERP is “a packaged business software
system that enables a company to manage the
efficient and effective use of resources (materials,
human resources, finance, etc.) by providing a total,
integrated solution for the organization’s
information-processing needs.
 W. W. Grainger Incorporation

W.W. Grainger, Inc. is a Fortune 500 industrial

supply company founded in 1927 in Chicago,
Illinois. Grainger's catalog includes such
offerings as motors, lighting, material
handling, fasteners, plumbing, tools, and
safety supplies. Revenue is generally from
business to business sales rather than
consumer sales.
 History

The company was founded by William W.

Grainger in 1927 in Chicago. He established
the company to provide an efficient solution
for customers to access a consistent supply of
electric motors. The business was incorporated
as W. W. Grainger, Inc. in 1928.
 Current business

The company is currently in the midst of a massive expansion,

which includes the remodeling of existing locations as well as
the company's entry into the Chinese market. Grainger is also
expanding their product offering, in 2008 their new catalog
featured over 183,000 products, and customers could purchase
over 350,000 products on Grainger.com. This is partly
primarily due to feedback from customers that Grainger
should carry an even broader supply of products.
W. W. Grainger Inc. PROJECT: SAP ERP system

WHAT HAPPENED?
Grainger spent at least $9 million on SAP
software and services in 1997-1998, but the
ERP system,Over-counted warehouse
inventory and had routine crashes. During the
worst six months, Grainger lost $19 million in
sales and $23million in profits. Grainger
patiently worked with SAP on fixes.
Grainger, a $4.3 billion company that sells manufacturing supplies and
spare parts, it said its profits for the fourth quarter of last year could be
as much as 45% below Wall Street's average expectation of about $50
million.
The big culprit continues to be the SAP AG-based enterprise resource
planning (ERP) system Grainger switched on to . Problems with the
R/3 system already cost Grainger $19 million in lost sales and $23
million in reduced earnings during the second and third quarters of
1999.
At the end of the fourth quarter, Grainger officials said, a physical
count of inventory showed that the ERP software was counting more
products than were actually on hand in the company's warehouses.
 The "inventory shrinkage," which was blamed
on transaction-processing failures during the
rollout of the new system, required a downward
adjustment in the inventory figures.
 salary and employee benefit costs were also
higher than expected due to costs associated
with installing the ERP system and doing the
inventory count.
Installing an ERP system can be an especially
thorny task for a distribution-oriented company
such as Grainger.
"There's such an enormous number of things they
sell, and they have an extremely complicated
business model and lots of [facilities],”. "It's the
sort of thing that puts a lot of pressure on
anybody's ERP system, not just SAP's."