CPJ pumping US$2.1 million in new ERP system
Food distributor Caribbean Producers Jamaica Limited (CPJ) is pumping US$2.1 million into a new enterprise resource planning (ERP) system, as part of a broader redevelopment and expansion plan the company is undertaking to boost its earnings.
CPJ has for years ran its business on Microsoft’s Great Plains — a mid-market business accounting or ERP software that uses Microsoft SQL Server to store data. But fear has flooded Great Plain’s customers around the world in recent times, on reports of an end of support or upgrades to the platform.
But last year chairman of CPJ Mark Hart began scouting a vendor to develop a new ERP system for the company before Great Plains pulled its rug, and it got responses from four companies — the majority being international players — to its request for proposals (RFPs).
CPJ is moving ahead with one of the vendors, but Hart declined to name the company, citing confidentiality clauses at this stage of the contract. But some of the most popular ERP systems are System Analysis Program (SAP), Oracle, Industrial and Financial Systems (IFS), Sage, and Epicor.
“We were using a lot of external companies to do different services under the Great Plains system including customer service models, demand planning, dispatch software, warehouse management. All of that was integrated into Great Plains, but it wasn’t a fully integrated system,” Hart told the Jamaica Observer.
“And so we have gone through a very robust RFP process, evaluated four companies, and made a selection,” he continued.
CPJ will work closely with the new ERP vendor over the next 12 months to build out a new system. But Hart expects to start benefiting from the system before that, say about October when it will officially launch the first phase of the project.
“The cost of implementation is US$2.1 million, but the licensing costs will be significantly less than what we have been paying for the Great Plain systems,” he said.
Savings on licensing fees are estimated to run some US$140 million annually for CPJ, but that’s just a fraction of the overall savings the company expects from the implementation of the new system.
“That’s what we will save in hard dollars against the cost of the system but of course, we are looking to have greater savings from the improvements in our processes. That figure has been conservatively put at roughly US$1 million per year,” Hart said.
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The failed mission forced CPJ to revert to its legacy Great Plains system to cauterise rising operating expenses arising from surcharges on a backlog of its containers at the port, linked to the delayed system.
But today Hart expresses great optimism in the ability of the new IT vendor, adding that the company was partly selected because of its focus on incorporating artificial intelligence (AI) in the development of its ERP systems.
AI-powered ERP systems are said to automate tasks, provide insights, and adapt to optimise processes like supply chain and production. Overall, its incorporation is expected to improve forecast accuracy and decision-making, freeing employees to focus on higher-value work.
“We did two major upgrades post-2018. First, we upgraded that system, then we did a new warehouse management system which included some changes to our logistics system,” the CPJ boss said.
“Jamaica has a very complex structure around importation, and we have automated that. We know what the goods cost before they get to Jamaica. All of that work will be integrated into the new system that we are building. Additionally, the upgrades are continuous, unlike the old system, so at no point will we be left behind. Our new software developer is also very spot on with development in AI which we will also benefit from in the future,” he continued.
Ahead of hunting a new partner for its ERP system, the company implemented a new software for customer service and marketing, aimed at enhancing its ability to serve customers while expanding its reach.
CPJ has also placed energy behind an online B2B & B2C marketplace, an initiative targeted at reaching an untapped segment of the market, leading to the acquisition of new customers while providing increased utility and service options for existing customers.
“With the online sales system, our customers can see pricing and inventory, they can adjust old orders and create new orders, review their credit and so on. The online system is a substitute, so it doesn’t replace the salesperson; but importantly, we are giving the customer more power, and then freeing up our sales team to strengthen relations with customers, introduce new products and all the other things that salespeople should be doing,” Hart said.
CPJ’s spend on developing its IT infrastructure is on one of several other projects being undertaken by the company. Overall, CPJ is projected to US$9 million on the expansion of its manufacturing plant alongside a significant investment in solar energy. The solar energy project is expected to reduce CPJ’s energy costs by more than 35 per cent annually, contributing to the company’s sustainability and cost-efficiency objectives.