Boca Electronics, a manufacturer of semiconductor components,wasestablished in Houston, Texas, in 2002 afterspinning off from itsparent company. Originally a branch of Vissay Inc.,Boca Electronicshad a solid customer base and strong sales with some major firmssuch as IBM, Compaq, and Motorola. Semiconductors included a widearray of products
that were broken down according to their application and material.Some of their main products include microprocessors, light-emittingdiodes (LEDs), rectifiers, and suppressors. Boca
Electronics operated on a mainframe system that it inherited fromits parent company and used additional stand-alone systems toperform many of its other business functions. For
the last four years the company had performed well financially, solittle concern had been given to the business operations. However,recent slowdowns in the economy and an increase
in competition in the semiconductor industry had forced BocaElectronics to take another look at the way it operated itsbusiness.

Ron Butler, the purchasing manager at Boca Electronics, wasresponsible for ordering raw materials and ensuring that theirdelivery was on time and met production requirements.
Ron used his own forecasting software to determine purchasing needsbased on past sales. Although this worked most ofthe time, Ronoften found himself scrambling to meet large customer orders at thelast minute and was forced to expedite a lot of orders to meet theproduction needs. Ron felt this was due largely to the lack ofcommunication between his department and the sales force. Althoughhe received production forecasts and projected sales from the salesdepartment, it occurred on an irregular basis, and the forecastswould often change by the time he had placed orders to thesuppliers. In addition, Ron had a difficult time synchronizing withsuppliers and determining factors such as lead times and productprices. He had previously recommended a new software system thatwould integrate with suppliers of key components but the proposalwas turned down by senior management due to a “current lack of needfor such an investment.” Boca Electronics also faced issuesregarding its cash flows. It took several weeks for the accountingdepartment to process invoices and usually had to e-mail back andforth with the sales manager to make multiple corrections. Becauseboth departments used different systems to manage customeraccounts, some of the data was redundant and inaccurate (customeraccounts would be updated in the sales department, but not inaccounting). Although this issue went largely unnoticed duringthriving periods, the recent slowdown in the economy revealedpotential repercussions of the current business operations, as BocaElectronics began to run short on its cash flows.

In the last month, one of Boca Electronics’ largest customersbegan requiring all its suppliers to integrate their manufacturingoperations to improve the sharing of information and
further improve its supply chain. This company had recentlyimplemented an ERP system from a major provider and was encouragingits suppliers to do the same. Suppliers had the
option of implementing middleware software to integrate operations.Whether suppliers chose to keep their current systems and implementmiddleware, or implement an ERP system that would integrate withthe company, they had one year to make the changes to continuedoing business with this customer.

Paul Andrews, the CIO at Boca Electronics, was well aware of theissues facing the company. He knew that something had to be done toimprove communication and information sharing within the company,and the current mainframe system was outdated and inefficient. Hewas also aware of the constraints that Ron was facing in Purchasingand how much it was costing the company. With the new request fromone of its largest customers for further integration, the idea ofimplementing an ERP system for Boca Electronics seemed like aviable solution to Paul. However, recent economic downturns and alimited amount of capital made such a large capital outlay a riskyinvestment for the company.

Determine the trade-offs of implementing an ERP system
in the company versus buying best-of-breed software and
using middleware to integrate.

What are the potential impacts of such an implementation
on the company’s suppliers and customers?

If the company chose to stay with the system it currently
has, what are some potential consequences that can occur
in the future?

Based on the business nature of the company, the industry,
and the current environment, what would you recommend
doing?