Luxury-goods company Tapestry, the owner of the Coach and Kate Spade brands, has undergone a tech makeover aimed at cutting costs and improving the shopping experience, reports The Wall Street Journal (Oct. 25, 2019). Acquiring Kate Spade in 2017 and Stuart Weitzman in 2015 left the company, formerly called Coach, with 3 brands operating independently under one roof. Various employees were doing similar tasks using different processes and information-technology systems. (Tapestry also sells its handbags, shoes and apparel in department stores).

NY-based Tapestry operates 1,500 stores under its 3 brands: Coach, Kate Spade and Stuart Weitzman

The company’s overhaul that has reduced duplication and centralized business operations across the three brands with a common technological backbone for functions including inventory management, distribution and sales. The centerpiece of the IT overhaul is a new software platform built around SAP’s S/4HANA enterprise-resource planning software that bridges back-office, logistics and other systems. ERP software integrates various functions into one system, streamlining processes and data across the company.

In the past the systems were integrated into seven ERP systems across brands and geographies and now Tapestry has one, single, global, multibrand platform. That provides a foundation for real-time features including inventory checks, in-store pickup for online purchases or the ability for sales associates to reserve a product for customers. The company is taking a 2-year charge of about $80 million related to ERP implementations. As we note in Ch. 14, ERP systems are long-term investments that don’t necessarily pay for themselves right off the bat. Seven years to eight years is often the break-even where a company sees its ERP investment pay off.

Tapestry’s ERP system takes information from point-of-sales systems in stores into a common back-office operation so there is a single process on reporting functions. The company now has a common system to collect and merge data generated by operations including inventory management and sales, providing a better high-level view of business performance across brands.

Discussion questions:

Why spend $80 million for someone else’s ERP system? Why don’t companies hire their own team of programmers to develop a customized version in-house?

Provide examples of ways in which an integrated computer system can improve operations for Tapestry.

Question

Luxury-goods company Tapestry, the owner of the Coach and Kate Spade brands, has undergone a tech makeover aimed at cutting costs and improving the shopping experience, reports The Wall Street Journal (Oct. 25, 2019). Acquiring Kate Spade in 2017 and Stuart Weitzman in 2015 left the company, formerly called Coach, with 3 brands operating independently under one roof. Various employees were doing similar tasks using different processes and information-technology systems. (Tapestry also sells its handbags, shoes and apparel in department stores).

NY-based Tapestry operates 1,500 stores under its 3 brands: Coach, Kate Spade and Stuart Weitzman

The company’s overhaul that has reduced duplication and centralized business operations across the three brands with a common technological backbone for functions including inventory management, distribution and sales. The centerpiece of the IT overhaul is a new software platform built around SAP’s S/4HANA enterprise-resource planning software that bridges back-office, logistics and other systems. ERP software integrates various functions into one system, streamlining processes and data across the company.

In the past the systems were integrated into seven ERP systems across brands and geographies and now Tapestry has one, single, global, multibrand platform. That provides a foundation for real-time features including inventory checks, in-store pickup for online purchases or the ability for sales associates to reserve a product for customers. The company is taking a 2-year charge of about $80 million related to ERP implementations. As we note in Ch. 14, ERP systems are long-term investments that don’t necessarily pay for themselves right off the bat. Seven years to eight years is often the break-even where a company sees its ERP investment pay off.

Tapestry’s ERP system takes information from point-of-sales systems in stores into a common back-office operation so there is a single process on reporting functions. The company now has a common system to collect and merge data generated by operations including inventory management and sales, providing a better high-level view of business performance across brands.

Discussion questions:

Why spend $80 million for someone else’s ERP system? Why don’t companies hire their own team of programmers to develop a customized version in-house?
Provide examples of ways in which an integrated computer system can improve operations for Tapestry.

Accepted Answer

given,
The company’s overhaul that has reduced duplication and centralized business operations…