--- title: "Justify EMS expenditure; push-pull SCM" subject: "Information System" chapter: 3 key: "semester_8/information_system:ems-expenditure-push-pull-scm" source: https://www.bctengineer.com/q/semester_8/information_system/ems-expenditure-push-pull-scm site: BCT Engineering --- # Justify EMS expenditure; push-pull SCM Information System · Chapter 3: Enterprise Management Systems - Asked in: 2074 Magh, 5+3 marks - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_8/information_system/ems-expenditure-push-pull-scm - Whole chapter: https://www.bctengineer.com/md/semester_8/information_system/chapter-3 ## Question How can you justify the huge expenditures on an implementation of Enterprise Management Systems? Explain with practical example. Explain the push-pull view of Supply Chain Management System (SCM). ## Short answer ERP costs are justified by tangible savings (lower inventory, fewer staff) and intangible benefits; a distributor recovered NPR 20 million in three years by cutting inventory 20% and reducing order time from three to one day. In SCM push-pull view, push produces on forecast, pull on actual customer orders, with a boundary in between. ## Answer #### Justifying large EMS expenditure Enterprise systems are costly (software license, hardware, consultants, customization, data migration, training, maintenance), so the cost is justified by tangible and intangible returns. 1. **Tangible benefits** - lower inventory and carrying cost, reduced staff time through automation, fewer errors, faster order processing, reduced IT cost from replacing many legacy systems, lower procurement cost. 2. **Intangible benefits** - better decisions, customer satisfaction, standard processes, improved image and flexibility. 3. **Strategic benefits** - ability to expand, enter new markets and meet partner or legal requirements. 4. **Financial methods** - ROI, payback period, NPV and total cost of ownership analysis, comparing cost against benefits over 5-7 years. 5. **Cost of not implementing** - fragmented data, errors and lost competitiveness. Example: a distribution company spent NPR 20 million on an ERP. It cut inventory by 20 percent, reduced order processing from 3 days to 1 day and removed 5 clerical posts, recovering the investment in about three years, while also getting accurate real-time reports. #### Push-pull view of SCM **Supply Chain Management** coordinates the flow of materials, information and money from suppliers to customers. ```text Suppliers -> Manufacturer -> Distributor -> Customer |------ PUSH ------>|<------- PULL --------| (forecast driven) (demand driven) ``` - **Push (make-to-stock)**: production and distribution are based on forecasts of demand. Suited to stable, predictable demand and economies of scale; risk is excess inventory. - **Pull (make-to-order)**: production is triggered by actual customer orders (e.g. Dell). Lower inventory, high customisation; risk is longer lead time. - **Push-pull boundary**: many firms push upstream (parts and components by forecast) and pull downstream (final assembly on order). ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. Which is a tangible benefit used to justify EMS expenditure? A. Lower inventory and carrying cost B. Improved company image C. Better customer satisfaction D. Flexibility for the future Answer: A. Tangible benefits are measurable savings such as lower inventory cost and reduced staff time; the others are intangible. (Key point: Tangible benefits) 2. Which methods are used to justify the cost of an ERP investment? A. Only the license price B. ROI, payback period, NPV and total cost of ownership C. Counting the number of modules D. Comparing screen designs Answer: B. Costs are compared against benefits over several years using ROI, payback, NPV and TCO. (Key point: Financial methods) 3. In the push view of SCM, production is based on what? A. Actual customer orders B. Supplier convenience only C. Forecasts of demand D. Random decisions of the distributor Answer: C. Push (make-to-stock) is forecast driven, with the risk of excess inventory. (Key point: Push strategy) 4. Which is true of the pull (make-to-order) model? A. Production is based on forecasts with high inventory B. It suits only very stable demand C. It has no risk and the lead time is zero D. Production is triggered by actual orders, giving lower inventory but a longer lead time Answer: D. Pull is demand driven like Dell; inventory is low and customisation high, but lead time is longer. (Key point: Pull strategy) ## Related in Information System - [Enterprise management system and benefits](https://www.bctengineer.com/question.md?key=semester_8%2Finformation_system%3Aems-with-example-benefits) — Information System, chapter 3 - [Enterprise systems architecture](https://www.bctengineer.com/question.md?key=semester_8%2Finformation_system%3Aenterprise-systems-architecture-motivation) — Information System, chapter 3, asked 2× - [Traditional IS vs enterprise systems](https://www.bctengineer.com/question.md?key=semester_8%2Finformation_system%3Atraditional-is-vs-enterprise-systems) — Information System, chapter 3 - [Electronic organization and EMS](https://www.bctengineer.com/question.md?key=semester_8%2Finformation_system%3Aelectronic-organization-ems) — Information System, chapter 3 - [System implementation and conversion](https://www.bctengineer.com/question.md?key=semester_8%2Finformation_system%3Asystem-implementation-conversion) — Information System, chapter 6 - [Knowledge management vs expert systems](https://www.bctengineer.com/question.md?key=semester_8%2Finformation_system%3Akm-vs-expert-systems) — Information System, chapter 4 ## Related in other subjects - [Transformer coupled push-pull efficiency, 20 V supply](https://www.bctengineer.com/question.md?key=semester_3%2Felectronics_devices_and_circuit%3Aclass-b-transformer-numeric-20v) — Electronics Devices and Circuit, chapter 4 - [System view of project management](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Asystem-view-three-parts) — ICT Project Management, chapter 5 - [Class B push-pull power and efficiency, 20 V peak](https://www.bctengineer.com/question.md?key=semester_3%2Felectronics_devices_and_circuit%3Aclass-b-push-pull-numeric-20v-16ohm) — Electronics Devices and Circuit, chapter 4, asked 2× - [Transformer coupled class B push-pull, 25π % efficiency](https://www.bctengineer.com/question.md?key=semester_3%2Felectronics_devices_and_circuit%3Atransformer-class-b-max-efficiency) — Electronics Devices and Circuit, chapter 4, asked 6×