Project evaluation is asystematic process of assessing the benefits of an ongoing orcompleted project. The set objectives are examined when undertakingthe role of project evaluation and the expected or budgeted targetsare compared with the actual results. This report paper will providean evaluation of Atlantic Project that is intended to design anenterprise resource planning (ERP) system that will allow improvementon how Whirlpool Europe serves its customers (Richard & Sudhakar,2003). The cost-benefit analysis of the project will be carried outfor this evaluation.
Whirlpool Europe producesproducts depending on the sales budgets and forecast. The companyholds the finished goods as inventory, and they are later distributedto the customers whenever they are demanded. The company operates 11manufacturing plants located in Europe and one in Africa. The firmhas been successful in this industry since they acknowledge theuniqueness in each country’s requirement including the differingoperating environment. EPR system is intended to analyze thesecountry’s requirements such as product attribute, customerpreferences, language, etc. The project will, therefore, help incapturing wide market share and, therefore, resulting in increasedsales. The system will also help to meet the customers’ needs ascompared to the past. Before the implementation of EPR system,Whirlpool Europe was capable of meeting only 79% of the consumers’needs (Richard & Sudhakar, 2003).
Whirlpool Europe is a knownworldwide leader in this industry of home appliances. The firm hasbeen on the market for about ten years, and it is still performingmuch better with continuous improvement, and its market share hasgrown to 13%. This reported market share was far much better thanthose recorded by the competitors in this same industry. ERP systemis also envisioned to re-organize the flow of information in theorganization in order to uphold efficiency and the effectiveness.
ERP system is simply meant toreduce the operational cost. Once the system is implemented, an 18%reduction in the 79 order desk employees cost reduction is expectedwhich is equivalent to an average cost of $40,000 per year. Another15% cost reduction in the 60 finance employees is also anticipatedwhich is an equivalent of $45,000 per year (Richard & Sudhakar,2003). The stock holding cost is also expected to reduce by 15% dueto the reduced warehouse space and the eliminated shipping errors.
Revenueand Profitability Implications
As it was mentioned earlier, ERPsystem would increase the sales level and hence boosting the expectedrevenue to a higher level. The system will make the supply chain ofthe company more visible by integrating the sales budgeting toinventory management. The projections show that the project willincrease sale by 25% by improving product availability to theconsumers. In Exhibit 5 of the company’s financial data analysis,the firm expects a profit margin of 25% if the ERP system isinstalled (Richard & Sudhakar, 2003).
From theabove analysis of Atlantic Project, we can conclude that EPR systemhas got more benefits to the company and therefore, it is viable forimplementation. The system will not only help the company inachieving its goal of profit maximization but also in acquiring ahigher competitive advantage. The project is, therefore, recommendedfor implementation.
Richard, R.& Sudhakar, B. (2003).Whirlpool Europe: Case Study