Post on 18-Nov-2014
A Case Study of ERP Implementation Issues
dr. Tom BramorskiUniversity of Wisconsin
USA
IntroductionMedium size U.S. business1,200 employeesMultiple, geographically scattered
manufacturing sites located in the Milwaukee metro area
Single finished product with a large variety of custom options
Multiple distribution centers worldwide
IntroductionBill of Materials with approximately 25
levels250 global suppliersMature product, well established brand
nameDemand consistently exceeds supplyProduction capacity shortageSAP R/3 ERP system
ERP BenefitsCross-functional process orientation
with high visibilityEnables exchange of information
throughout the supply chain in real timeReduces operations costs Reduces cycle times Facilitates bottleneck identification and
management
ERP Benefits Improved inventory management and
inventory cost reduction Improved customer service levels,
material shortages and reduced late deliveries
Standardized and normalized data and data formats
ERP BenefitsEnhanced communication across
functional boundariesEmphasis on process orientationEnhanced integration across the supply
chain and business units Expanded information access with
appropriate user rights
ERP BenefitsEnhanced empowerment of employees
through increased information sharing Improved system-wide accountability
and visibility Facilitates the implementation of do it
right the first time philosophy Improved accuracy of forecasting and
master scheduling
Specifically, ERP Benefits:Organization and it’s supplier chainManufacturing and sales functions Inventory managementProduct distribution and logistics IT function by consolidating and
standardizing diverse legacy database platforms
ERP DisadvantagesLarge dollar investments for setup,
implementation and maintenance even for small ERP projects
Painful and lengthy implementation and debugging
High level of expertise needed for implementation and debugging
ERP DisadvantagesMultiple difficulties are hidden leading
do “doubling the time and tripling the cost” estimates for the project
Difficulties amplify organizational resistance to change
Strategic benefits are hard to quantifyTargets are rarely achievedPlans are too ambitious (time and $$$)
ERP DisadvantagesExpectations are unrealisticLack of understanding of strategic
benefits of ERP implementation (follow the crowd mentality)
Superficial implementation with a lack of necessary infrastructure support
Is it really worth it?
ERP Implementation CaseSpecific Strategic Goals:
Speed-up new product development Improve customer focus (emphasis on
large accounts) Eliminate 5 independent computer systems
to improve operating system efficiency Eliminate functional silos by enhancing
communication
ERP Implementation CasePhase I: The establishment of a
“Customer First” team in order to: Identify customer expectations (for external
and internal customers) Understand the current processes Identify improvement opportunities Determine future process vision, targets,
and goals, and Develop a Vision
ERP Implementation CasePhase I implementation difficulties:
Lack of common vision (functional silo mentality) based on 220 interviews
Current processes and infrastructure could not efficiently support the requirements of increased customer demands
SAP Modules Selected for ImplementationMaterials ManagementSales and DistributionProduction PlanningWarehouse ManagementHuman ResourcesBusiness to Business
SAP Modules Selected for ImplementationAdvanced Planning Optimizer
(Forecasting Tool)Financial Accounting/ControllingCosting, andCustomer Relations Management
Implementation Schedule18 months allowed for complete system
implementationSystem simulations performed in May,
2002 using mock transactionsGo-live in July, 2002 (slow business
period) IBM consultants retained to facilitate the
implementation process
Implementation IssuesSince 7/2002 implementation there was:
Confusion and a general lack of knowledge about the new system throughout the organization
The production and inventory control department, as well as the SAP help desk, and IS department were pummeled with a lot of questions that they did not have the capacity to answer
Implementation IssuesSince 7/2002 implementation there was:
A lack of tools for generating necessary reports/ the new system wasn’t customized to the business
Lack of quantitative measures to assess implementation progresses and the fulfillment of strategic benefits
Implementation IssuesSince 7/2002 implementation there was:
A lack of knowledge regarding the forecasting module decreased forecasting accuracy
No back-up plans Unacceptable consultant turnover
produced instability
Implementation IssuesSince 7/2002 implementation there was:
Data had been inaccurate, incomplete, overlooked or was not entered into the system causing many errors (garbage-in, garbage-out)
Confidence in the system amongst internal and external customers was undermined
Implementation IssuesSince 7/2002 implementation there was:
Insufficient time and money necessary to successfully implement the project
Management pushed for a quick transition to a new system to save money on current system software licenses
Finger-pointing and blame shifting for poor system performance
4 Major Implementation Issues Always develop back up strategies and
computer infrastructure systems Review and understand your current
processes and need before defining the need for a system (Choose or design a system around your business needs)
Support and drive from executive staff to change corporate culture is a must, and
Training, Training, Training
Conclusions Develop a system exploitation strategy:
Identify projects that utilize the base infrastructure and deliver the biggest benefits
Find people who understand the business and its processes, and the technology
Conclusions Develop benefit-focused implementation
plans supporter by specific business cases
Establish recognizable benefit delivery processes