Snap-On Tools charges that (Baan's) ERP software
has caused lost sales of $50 million in the past 6 months.
SUMMARY
"Snap-on Inc., its profit growth upended by a computer system snafu, said it will close five of its 38 manufacturing plants, trim its product line and lay off 1,000 employees, about 8% of its work force."
SOURCE
We quoted the summary information above from the June 30th Wall Street Journal, Business Briefs section.
KEY POINTS
In recent weeks the bad news about Baan has been piling up. Revenue and Profit revisions downward, customer action group formed to pressure Baan to be more responsive to customer problems, problems with its VAR Partners effort, arbitration underway with a couple of customers in North America and more.
Its VAR program was intended to recruit 200 VAR Partners in the past year, but according to a May 12th Computer Reseller News article, have only gotten about 30 to commit.
The (Baan) ERP system installed last December is being blamed for much of the restructuring and lost sales revenue. "That system (Baan designed to make it easier for Snap-on franchisees to order products, has instead created order delays that resulted in some $50 million in lost sales in the first six months of the year."
"Snap-on has been working on its new computer order-delivery system for about three years. But until last December, the company was also operating a parallel computer system that allowed its franchisees to order products the old way.
Once the company switched over to the new system full-time, dealers began complaining the company wasn't filling orders quickly. The dealers can sell tools from other manufacturers, too. "Many of them went out and found alternative sources", said Alexander Paris, an analyst with Barrington Research in Chicago.
Assessment
Snap-on has not thrown out Baan, merely revealed that one reason they have experienced financial difficulties is the Baan packages problems and shortcomings. They may be using this situation to bargain with Baan, which means they will likely be protective of Baan unless they come to a complete falling out.
Refer prospects to the Wall Street Journal article and similar stories in the Milwaukee Journal Sentinel on 30 June 1998. Baan was identified as the ERP vendor at Snap-on by a former Baan employee. Snap-on was previously a premier Baan reference site. Here is a link to the Milwaukee Journal Sentinel for two stories: jsonline.com
KEY QUOTES
Alexander Paris Sr., an analyst with Barrington Research, Chicago, also made the following comment: "... computer woes have caused the company to lose $40 million to $50 million in sales since March. That's a substantial hit..."
Michael R. Mach, a research analyst with Piper Jaffray, of Minneapolis, said "computer problems are a major reason for the company's current problems. They encountered some glitches in the new system in the first quarter, and it became clear that employees who were going to be using the system needed more training."
Rich Secor, Snap-on spokesman said "There were times when we would place an order and the system would say the product wasn't there when, in fact, it was. It took us a while to realize that some of the sales problems we were having were a result of the new system."
The quotes above are from a story in the Milwaukee Journal Sentinel's business section of 30 June 1998.
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