INVACARE STRUGGLES WITH ITS

ENTERPRISE SYSTEM
IMPLEMENTATION
TEAM 6 MEMBERS

Gene Dockal

George Mathew
 About Invacare
 Headquarters
 Elyria, Ohio
 Leading manufacturer of non-acute health care
products
 Wheel chairs
 Motorized Scooters
 Home Care Beds
 Conducts business world-wide
 U.S.
 11 Other Nations
Struggles
 Not much inventory
 In 2004 began working on replacing a collection of
homemade legacy systems
 Used Oracle 11i E-Business Suite
 Had been using Oracle database software
 Had implemented financial modules from Oracle E-
Business Suite four years earlier.
 No problems implementing and using the Oracle E-
Business financial modules.
Order-To-Cash Module=TROUBLE!
 Allows a company to receive an order, allocate
supplies to build it and provide customer access
to order status
 Originally tested using real-world business
conditions
 Everyone felt software was ready
 Order-To-Cash Module=TROUBLE!
(cont’d)
 System went live in October 2005
 Call center reps were unable to answer customer
telephone calls in timely manner
 They were unable to find complete information in
the system about stock availability
 Invacare was unable to ship products to customers
within required lead time
 Results of the struggle
 Lost sales
 Higher than usual levels of returned goods
 Extra expenses for overtime pay
 Manufacturing
 Distribution
 Customer-Service
 Fourth-quarter 2005 Revenue cut
 Estimated between $370 & $380 Million
 Overall loss: $30 Million for the quarter
 Extended into first quarter of 2006
 After the “storm”
 Invacare changed internal controls over financial
reporting
 During the final quarter of 2005 had to perform a
physical year-end inventory for North American
operations
 Had to take special steps to validate financial
figures
 What Now
 Invacare recognized that their struggle was not an Oracle
problem
 Misconfiguration led to the problem
 Worked closely with Oracle support
 Hope to implement new ERP system
 Hoping the new system will provide enough value to offset company’s
losses
 Invacare have spent 20 million on its new ERP implementation
 Final phase of ERP implementation was scheduled for late 2007 or
early 2008.
 New Focus
 Improve integrated systems platform
 Use cash flow for accretive acquisitions to drive 8 - 10% sales
growth
 Reduce cost by continuing to rationalize the supply chain
 Manage for cash and reduce leverage
 Globalize the product offering
 Return to historical profitability
 Invest and grow to further diversify from U.S. Medicare
equipment dependence
 Case Study Questions
1. How did problems implementing the Oracle enterprise
software affect Invacare’s business performance?

By misconfiguring the Oracle Business Suite, Invacare

was unable to communicate with their customers, keep
track of available stock and was unable to ship products
to customers within required lead time.

This lead to the loss of $30 Million for the quarter

 Case Study Questions
(cont’d)

2. What people, organization and technology factors

affected Invacare’s ERP implementation?

Oracle’s E-Business suite had been used by Invacare for

years. Even though the Information Systems
Specialists tested the app against real-world business
conditions, it obviously was not prepared for a full
implementation. Oracle worked closely with Invacare
to get the system issues resolved and the company is
already experiencing system improvements.
 Case Study Questions
(cont’d)

3. If you were Invacare’s management, what steps would you have

taken to prevent these problems?

Although the testing was done using real-world business

conditions, additional testing may have identified the problem.
As well, a “introductory” test period may have been a better
approach than a full-blown implementation.
 Case Study Questions
(cont’d)

4. List and describe the capabilities of the order

management modules.

Capabilities include:
 Open workflow based architecture
 Captures multi-channel demand from sources including EDI,
XML, telesales or web storefronts.
 Enables global order promising integrated to shipment
execution.
 Case Study Questions
(cont’d)

5. How would the order management modules benefit a company such as Invacare?
Describe how Invacare would use these capabilities.

Improve Sales Visibility

 Sale agents have access to accurate and complete information via a single repository
housing all relevant sales transactions. This would allow Invacare to keep tabs on stock
availability, etc.

Increase Customer Satisfaction

 Customers are empowered through self-service status tracking functionality, accessible
on the Internet. This would allow Invacare customers the ability to track the status of
their order.

Expedite Sales Cycles

 Blanket sales agreements associate customer orders (releases) with pre-negotiated terms
and volume commitments. This would allow Invacare the ability to maintain the correct