DETROIT - Designed to improve a company's performance, Enterprise Resource Planning (ERP) systems have proven to be a very costly headache for many. Late last year, the Wayne State University Board of Governors approved the establishment of a Manufacturing Information Systems Center - a resource that can help companies make sound decisions when choosing, implementing and using these systems.

Experts estimate that companies around the world spend $10 billion annually on ERP software packages to run and monitor their major activities, i.e., purchasing, production planning, sales, accounting, human resources, etc., more efficiently. For various reasons, many of these companies find that the return on their investment is just not significant, pointed out Arik Ragowsky, Ph.D., an assistant professor of information systems and manufacturing at the WSU School of Business Administration and director of the new Manufacturing Information Systems Center.

The Manufacturing Information Systems Center has been in the works for more than a year, and the WSU board's approval paves the way for Ragowsky and colleagues to begin working with companies. Through the center, they also plan to continue conducting applied and basic research.

"There are thousands of cases of companies that have implemented ERP software packages and are very disappointed with the outcome. Some decide to just pull the plug," Ragowsky said. For example, Allied Waste Industries Inc. and Hershey Foods Corp. have made the news in recent months due to major problems with the systems. Hershey installed an ERP application in early 1999, and by mid-September the candy-making giant was having trouble pushing orders through the new system. The glitches resulted in shipment delays and incomplete orders during the busy Halloween season.

"These are extreme cases," noted Ragowsky. "There are many other companies that believe they are successful, but, for all practical purposes, they are only using the ERP packages for clerical tasks like bookkeeping when the software was developed to do so much more."

Based on years of work in the field and recent international research findings, Ragowsky found that organizations gain different benefits when using the same ERP applications, depending on individual needs, structure, relationships with customers and suppliers, etc. He developed a model for identifying the benefits an individual manufacturing organization can gain by using ERP systems. The center can help manufacturing companies in Southeastern Michigan to better plan and use their investment in ERP systems in a way that will enhance performance, while avoiding the problems that many companies have faced.