Business Case - SCM Implementation

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Business Case - SCM Implementation

  1. 1. SCM Implementation A Business Case for Sobeys Inc. Submitted By: Sharad Srivastava 12810076 DoMS, IIT Roorkee
  2. 2. Contents Executive Summary .................................................................................................................................... 3 Introduction ................................................................................................................................................ 4 Project Name: ......................................................................................................................................... 4 Project Team: .......................................................................................................................................... 4 Project Description: ................................................................................................................................ 4 Background & Problem Definition .............................................................................................................. 4 Why SCM Package at Sobeys Inc.? ............................................................................................................. 5 Market Study across the Retail Industry..................................................................................................... 6 Measurable Organizational Value (MOV) ................................................................................................... 8 Quantifying the MOV ................................................................................................................................ 10 Framework for evaluating the Implementation ....................................................................................... 11 Total Cost of Ownership ........................................................................................................................... 12 Total Benefits of Ownership ..................................................................................................................... 13 Financial Analysis ...................................................................................................................................... 13 Total Cost of Ownership Details ............................................................................................................... 15 Total Benefits of Ownership Details ......................................................................................................... 16 Comparative Study of Alternatives ........................................................................................................... 19 Recommendations .................................................................................................................................... 23 Risk Management ..................................................................................................................................... 24
  3. 3. Executive Summary ERP implementation business case for Sobeys Inc. discusses the various issues for ERP implementation proposal in the company. The company has more than 1500 stores in 10 provinces. It also has a national network of 25 distribution centers. The firm is now running on different applications for different functions across different locations in the organization and now they are facing various issues like Inventory Management, Material Requirement Planning, Warehouse Management, Shop Floor Management, Requisition, Purchase orders , Goods receipts and BOM’s, Quality Management, Lack of proper communication across the Supply Chain, Unutilized spaces in the Warehouse, Unsatisfied On Time Delivery Performance. All these factors drive them to think about an ERP implementation across all the locations. The business case then discusses various measurable organization values and the time frame it will take to achieve it. Finally the case concludes with the risks involved and recommendations.
  4. 4. Introduction Project Name: SCM implementation for the Sobeys Inc. Project Team: The team consists of basically: -1. Steering Committee: The members of this particular committee include project sponsors, the SCM consulting manager and the project manager. 2. Consultants 3. Global Procurement Team 4. Change Managers 5. Consortium of Product Dealers Project Description: The project is all about implementing SCM package across 25 distribution centres and thousands of stores of Sobeys Inc. covering 10 different geographies. Canada. The project covers various aspects like integrating the various supply chain functions across the organization in to a single system that can serve all the purpose of the functions specific needs. Background & Problem Definition Sobeys Inc., Canada’s second largest food retailer, was founded in 1907 as a meat delivery business. In 1924 it decided to expand business to full line of groceries and finally in 1939 the Sobeys’ chain of stores started. The first modern supermarket was opened in 1947 and the company has been growing since then. In 2009, Sobeys opened its first distribution center. The second was opened in 2013. Today Sobeys employs over 95,000 employees in around 1583 stores, and is one of Canada’s largest private employers. As is the case with many companies known for pioneering innovation in their industries, Sobeys Inc. is committed to using advanced technology systems to assure a continually productive operating environment. Sobeys’ technical support group monitors and runs the company’s numerous business process applications, including softwares used by the distribution and billing departments as well as inventory. If any one of these systems fail, the support group has to communicate as quickly as possible with key stakeholders, especially those in the distribution centers to avoid delays in order fulfillment. The technical support group had been historically relying on manual pages and phone calls to communicate, but they eventually decided it wasn’t an adequate manner for such time critical tasks. The company required a wireless system that quickly communicated critical information and, as will be described in greater detail, could display its capability to match with Sobeys as the company expanded its use of wireless technology.
  5. 5. Some of the issues which the organization was currently facing included: Inventory Management Material Requirement Planning Warehouse Management Shop Floor Management Requisition, Purchase Orders, Goods receipts and BOM’s Quality Management Lack of proper communication across the Supply Chain Unutilized spaces in the Warehouse. Unsatisfied On Time Delivery Performance Why SCM Package at Sobeys Inc.? The grocery industry in Canada is competitive and dominated by eight major chains that hold approximately 75% of the traditional food distribution market. Loblaw Companies Ltd. Is the market leader in Canada and eighth largest in North America, followed by Sobeys Inc. Sobeys Inc. must re-examine and fine-tune their supply chain processes to deliver high quality goods at very low costs that too with good quality. This is essential for staying ahead in the competition. Globalization has led to increase in competition and quality awareness and therefore it has become very important for the industry to integrate itself with latest information technology to survive. Most of the competitors in the food distribution market have turned to several SCM packages for their supply chain optimization and used the technology and domain expertise of SCM IT Solutions in demand management, inventory handling, sales and operations planning, category management, and transportation and logistics management. Some of the Key benefits one can expect out of application of such packages are: Drive visibility and optimization with synchronized demand. Companies can develop efficient demand plans that enhance forecast accuracy, reduce inventory costs and optimize income. Manage inventory levels to match current and future demand. Companies can accomplish unmatched optimization by using demand-supply matching to support their complex replenishment and logistics processes while minimizing inventory and logistics costs. Sense and respond faster to changing market conditions with daily planning and scheduling. Companies can quickly respond to daily variation in customer demand, ranging from manufacturing activities through logistics functions. Integrate planning and execution across enterprise with sales and operations planning. Companies can lessen operational silos and gain a single, broad view of the business, including potential and barriers that must be reconciled with corporate goals. Establish optimal inventory for better cash flow management. Companies can free up working capital stuck in ineffective inventory and accelerate responsiveness to
  6. 6. marketplace changes. Profitably manage and maximize category performance. Companies can utilize the strategic space and category management capabilities to increase insight into market trends while enhancing sales and market share. Strategically manage transportation and logistics functions. Companies can attain a competitive advantage in their supply chains through strategic global logistics network management. To conclude, the classic demand chain begins with the customer and extends from the point of sale then back to the retailer's distribution centre, whereas the classic supply chain begins with the raw material suppliers and extends down through the distribution network. With enhanced competition resulting from globalization and newer business models, the shift toward a holistic perspective of the entire supply and demand chain is converging into what Experts call the "customer-driven value chain." Market Study across the Retail Industry The Retail industry is consolidating at a rapid pace as the top players attempt to expand their networks across the globe. Global retail sales were $15.2 trillion in 2012. The United States retail sector features the largest number of large, profitable retailers in the world. A 2012 Deloitte report featured in STORES magazine indicated that of the world's top 250 largest retailers by retail sales revenue in fiscal year 2010, 32% of those retailers were based in the United States and those 32% accounted for 41% of the total retail sales revenue of the top 250. Among retailers and retail chains a lot of consolidation appeared over the last couple of decades. Between 1988 and 2010, globally 40,788 mergers & acquisitions with a total value of $2,255 billion have been declared. The largest transactions involving retailers in/from the United States have been: the acquisition of Albertson's Inc. for $17 billion in 2006, the merger between Federated Department Stores Inc. with May Department Stores valued at $16.5 billion in 2005 (now Macy's) and the merger between Kmart Holding Corp and Sears Roebuck & Co with a value of $10.9 billion in 2004. In June 2013, Sobeys announced the purchase of Canada Safeway for $5.8 billion, positioning the Company as a leading grocer in Western Canada and #1 in the Alberta market. The 2012 Global Retail Development Index reflects dramatic changes in the global economy and the different ways in which developing countries have been affected. Some developing markets have come out from the recession stronger than before, while others surrendered to the political turmoil that economic distress brings. Today, as top international retailers are rewarded for their flexibility and long-term outlook in the face of short-term ambiguity, it is time to concentrate on a set of countries—with diverse risk levels, at various stages of maturity and with distinctive consumer profiles—to balance short- and long-term opportunities. The GRDI is an annual study that ranks the top 30 developing countries for retail expansion worldwide. The Index considers 25 macroeconomic and retail specific parameters, both to assist retailers devise successful global strategies and to identify emerging market investment
  7. 7. opportunities. The GRDI is unique because it not only identifies which markets are the most successful today but also which markets offer the most potential in the future. The Global Retail Development Index ranks 30 developing countries on a 0-to-100-point scale—the higher the ranking, the greater urgency there is to go into a country. Countries are chosen from 200 developing nations based on three criteria: Country risk: 35 or more in the Euromoney country-risk score Population size: two million or more Wealth: GDP per capita of more than $3,000 (Note: The GDP per capita threshold for countries with more than 35 million people is more flexible because of the market opportunity.) Case of Walmart SCM Initiatives Walmart, the market leader of Retail Market, has successfully integrated its vast operations across a customer driven value chain or Supply Chain by implementing the SCM packages across the organization levels. Some of the major benefits out of that successful implementation are: -Desired Objective Operating cost Inventory Level Warehouse Number Logistics Cost Accuracy of Sales Forecast Data Customer Satisfaction Level Time to Market for a Product Change Brought Reduced by 9% Reduced by 20% Number reduced by 7 Reduced by 10% Increased by 6% Rose to 98% Reduced by 2 weeks These factors have been the testimony for the fact that implementing SCM packages in the system increases our benefits.
  8. 8. Measurable Organizational Value (MOV) By implementing an SCM application, the organization wants to integrate all functions like procurement, demand management, vendor network, inventory management etc. across the organization into a single customer driven value Chain that can serve all the purpose of the functions specific needs of Supply Chain. Now breaking down the benefits of implementing an SCM package will give the following benefits: -Financial and Strategic Benefits: Reduced Inventory Cost Reduced Logistics & transportation Cost Greater adaptability to market variations Reduction in operating cost and thereby giving Increased Profits Achievement of company-wide consistency of information Gain greater visibility into sales order and fulfilment data Enhanced order fulfilment by accelerating the sales order process Centralized Demand forecasting & Planning Standardized business processes, reports, and data for increased efficiency and control Increased business transparency to control costs and support operational decisions Improved data accuracy and consistency via real-time monitoring for informed decisions Operational Benefits Improved spend management Reduced Bullwhip effect across the supply chain Reduced Lead time or Time to Market for products Better workflow & assembly processes Organization moves from being a push system to pull driven system Enhance employee productivity considerably Established greater operational efficiency via integrated processes Improved inventory management and also helps in reducing material wastage Gained better supply chain visibility and control to support negotiations and service Reduction in non value added activities across the supply chain Rationalized and consistent business processes Customer Benefits They can track their orders Enhanced On-Time Delivery of Products
  9. 9. Proper visibility and transparency Improved Customer Satisfaction levels Improved ability to meet customer commitments & developing long term partnership
  10. 10. Quantifying the MOV In order to calculate whether the project is successful or not it was very essential to find out a quantified targets which will be achieved with the help of this project .So in this case we have calculated the measurable organisational value for a period of 5 years and have formulated certain targets which the project is supposed to meet at the end of 5 years to become a successful project. Following can be the measurable organizational value for this project:  Implementation of SCM solution across the organization should result in 20% increase in the market share.  SCM solution should reduce the time to market for a product by 40%.  It should result in the Inventory cost reduction by 30%  It should result in 15% more resource and asset utilization.  It should reduce the Logistics & Transportation cost by 30%. There are some other measurable organization value attached with the project and it will be helpful to summarize all these in tabular format, so that it could be verified at the end of stipulated time period. Sr. No. Desired Objective Change Factor 1 Operating cost Reduction by 10% 2 Inventory Cost Reduction by 20% 3 Time to Market Reduction by 5% 4 Logistics Cost Reduction by 8% 5 Market Share Increase by 5% 6 Resource & Asset Utilization Increase by 7% 7 Warehouse Area Reduction by 11% 8 Higher Accuracy of Sales Forecast Data Increase by 5% 9 Order Turnaround Time Reduction by 2% 10 Productivity Level Increase by 6% ** Values derived using previous similar implementation Time 2 Years 18 Months 18 Months 1 Year 2 Years 1 Year 18 Months 1 Year 1 year 1 Year
  11. 11. Framework for evaluating the Implementation An intuitive framework for evaluating the cost savings, business value and strategic benefits for implementation was developed for this case. This framework includes four vital elements: 1. Implementation cost analysis 2. Post-implementation cost savings analysis 3. Post-implementation business value improvement analysis 4. Post-implementation strategic benefit analysis Framework Cost and Benefit Drivers Now in order to carry out the above mentioned analysis it was very essential that we need to have some parameters for the analysis. The below mentioned table provides a record of the cost, cost savings, business value and strategic drivers included in this implementation business case framework and economic analysis. Implementation Cost of Line Items Planning Cost Cost Saving Line Items Operating Cost Internal Implementation Third Party Implementation Inventory Cost Training Hardware Cost Logistics Cost Product Cost OS Licensing Cost Resource & Asset Utilization Warehouse Area OS Support Fee DB Licensing Cost Admin. And Misc. Transportation Cost Higher Accuracy of Sales Forecast Data Order Turnaround Time Productivity Level Business Value Line Items Enhanced Decision Making Process or Cycle Time Saving/Value Improved Customer Satisfaction Strategic Benefit Line Items Market Share Competitiveness Overall Business Agility High Efficiency Enhanced Customer Loyalty Less Variation Customer driven Value Chain
  12. 12. Now based on the cost, cost savings and business value drivers in the preceding table, a comprehensive, comparative cost and benefit model to quantify the implementation return on investment (ROI) over a five-year analysis horizon was developed. The costs and benefits were based on the actual and expected costs and benefits validated in the primary and secondary research phases of the project. A discounted cash flow approach was used to account for the relative timing of the costs and benefits spanning the five years. Total Cost of Ownership For quantifying the cost related to the project following factors are taken into consideration for calculating the total cost of ownership. The various costs that incurs during an implementation includes: -Planning cost: It is the cost associated with planning prior to implementation.   Implementation (Internal): Internal labour for the implementation activities including installation, configuration as well as testing  Implementation (3rd party): 3rd party labour for the implementation activities including installation, configuration as well as testing  Training: The training investment for the new package  Hardware cost: Cost for the hardware’s associated with new implementation  OS Licensing cost: Server licensing cost and the user accounts costs  New Server OS support fees: Ongoing server OS Support Cost (annual)  Database licensing cost: Licensing cost for the new database associated with ERP  Admin/ Misc: Admin / Misc cost associated with migration 
  13. 13. Total Benefits of Ownership These are the savings or the benefits which company will receive because of implementing ERP across the organisation. These benefits are classified into: -1. Cost Saving Line items 2. Implementation Value Drivers 3. Strategic Implementation Drivers Cost Saving Line Items Operating Cost Inventory Cost Transportation Cost Total Benefit of Ownership Business Value Line Items Enhanced Decision Making Process or Cycle Time Saving/Value Improved Customer Satisfaction Logistics Lost Product Cost Resource & Asset Utilization Warehouse Area Strategic Benefit Line Items Market Share Competitiveness Overall Business Agility High Efficiency Enhanced Customer Loyalty Less Variation Customer Driven Value Chain Higher Accuracy of Sales Forecast Data Order Turnaround Time Improved Profit Margin Productivity Level Financial Analysis Here we are using the Return on Investment Method to calculate the ROI and from this we will calculate the payback period also Project ROI = (Total expected benefits – Total expected costs) Total expected costs Payback Period = Initial Investment Net Cash Flow
  14. 14. The following analysis provides a summary of the return on investment and expected breakeven based on implementation cost/benefit analysis over five years. The results are based on the net present value (NPV) of the cost and benefit cash flows over the five year period. Based on an average five-year implementation cost of $675K, with an average implementation length of six months from initial planning to production deployment, the companies interviewed cited substantial cost savings and business value drivers, yielding a total five-year benefit of $2.15M. This results in a five-year Return on Investment (ROI) of 220% and a payback of 19 months from the completion of the migration.
  15. 15. Total Cost of Ownership Details Cost Line Items Planning Cost Internal Implementation Third Party Implementation Training Hardware Cost OS Licensing Cost OS Support Fee DB Licensing Cost Travel Admin. & Misc. Total Cost for 5 Years (in $) 1,11,000 1,68,000 1,44,000 % of 5 Years Cost 14.64% 22.16% 18.99% 75,000 46,667 24,000 91,667 24,500 36,667 36,667 7,58,168 9.89% 6.16% 3.17% 12.09% 3.23% 4.84% 4.84% 100.00%
  16. 16. A few key elements of analysis from the implementation cost research are listed below: -The labour costs for the implementation planning and implementation represent the majority of the cost of the migration, 56% of the total five-year cost. The primary reason for the substantial amount of cost is that the implementation includes the buying of the SCM application itself as well as the underlying SCM database implementation  Software support fees are the next major cost element, primarily because this is a recurring annual cost of approximately $18K that amounts to about $92K over the five-year period.  New hardware purchase represents 6% of the total five-year cost, with a cost of $46K.  Server OS Licensing Costs represent only 3% of the total five-year cost, with a cost of $24K.   Total Benefits of Ownership Details Now as we saw in the previous section the various costs associated with the implementation here in this section we will see what all are the savings or the benefits which we will receive because of implementing SCM Solutions. These benefits are classified into: -1. Cost Saving Line items 2. Implementation Value Drivers 3. Strategic Implementation Drivers Cost saving Line items These benefits are summarized in the form of a table which is shown below: -Saving Line Items Operating Cost Inventory Cost Transportation Cost Logistics Cost Product Cost Resource & Utilization Cost Warehouse Area Higher Accuracy of Sales Forecast Data Order Turnaround Time Productivity Level Total Saving in 5 Years (in $) 1,93,489 2,37,645 1,42,737 1,29,910 1,06,213 1,29,876 41,256 89,356 % of 5 Years saving 15.20% 18.67% 11.21% 10.20% 8.34% 10.20% 3.24% 7.02% 76,498 1,26,226 12,73,206 6.01% 9.91% 100.00%
  17. 17. Implementation Value Drivers The figure below presents the average implementation business value drivers based on the BI implementation project along with the percentage of the five-year benefit for each cost line item. Business Value Line Items Enhanced Decision Making, Process or Cycle Time/Value Improved Customer Satisfaction Total Value in 5 Years (in $) 4,02,378 3,82,675 5,66,212 % of 5 Years Value 29.78% 28.32% 41.90% 13,51,265 100.00%
  18. 18. Strategic Implementation Drivers Below data represents the rank order of the strategic implementation benefits based on the similar SCM implementations. Based on the research and previous experiences, a rank was assigned to a set of six strategic migration drivers from most impact (rank 1) to least impact (rank 6). The top two ranked items – business agility and high efficiency – are of particular business value that spans beyond the IT organization and affects the entire organization. In addition to those listed, there were others cited by interviewees including the strategic value of collaboration Cash Flow Summary Analysis The figure below illustrates the annual analysis of the implementation cost (investment), cost savings and business value for the initial year through year five. Also illustrated are the cumulative costs/investment and the cumulative economic benefits. Implementation Cost Cost Saving Business Value Cost Saving + Business Value Year 1 6,75,407 1,96,435 1,98,412 3,94,847 6,75,407 Cumulative Cost 3,94,847 Cumulative Benefit ** Cash Flows are actual & not discounted. Year 2 18,333 2,06,709 2,48,666 4,55,375 Year 3 18,333 3,41,523 2,76,980 6,18,503 Year 4 18,333 3,26,489 3,03,566 6,30,055 Year 5 18,333 2,02050 3,23,641 525,691 6,93,740 8,50,222 7,12,073 14,68,725 7,30,406 20,98,780 7,48,739 26,24,471
  19. 19. Financial Summary Business Case Summary 6,75,407 Implementation (Investment) Cost Saving (NPV of Cash Flows) 10,49,901 11,02,505 Business Value 21,52,406 Five Year Benefit (NPV) 14,76,999 Net Benefit (Return less Investment) 218.68% Return on Investment (RoI) 19 Months Estimated Payback (in months) Comparative Study of Alternatives Now in order to find out which SCM package can best suit the need and which can basically meet the quantified targets, we would like to carry out a comparative study between various SCM solutions. It includes: -1. SAP SCM, part of SAP Business Suite 2. Oracle Supply Chain Management (SCM) Suite 3. JDA Supply Chain Planning & Optimization
  20. 20. Source: Gartner *Ariba's estimates represent 9 months of business operations before its acquisition by SAP SAP SCM, part of SAP Business Suite SAP Supply Chain Management (SAP SCM) enables collaboration, planning, execution, and coordination of the entire supply network, enabling you to adapt your supply chain processes to an everchanging competitive environment. SAP SCM is an element of the SAP Business Suite, which gives organizations the distinct ability to perform their essential business processes with modular software that is designed to work with other SAP and non-SAP software. SAP SCM can assist transform a sequential supply chain into a responsive supply network – in which communities of customer-centric, demanddriven companies share knowledge, intelligently adjust to changing market conditions, and proactively respond to shorter, less predictable life cycles.
  21. 21. SAP SCM delivers a complete set of features and functions for building adaptive supply chain networks. The application enables: -Supply chain planning and collaboration – With SAP SCM, you can model your existing supply chain; set goals; and forecast, optimize, and schedule time, materials and other resources. Supply chain planning functionality enables you to maximize return on assets and ensure a profitable match of supply and demand. Supply chain execution – SAP SCM enables you to carry out supply chain planning and generate high efficiency at the lowest possible cost. You can sense and respond to demand through an adaptive supply chain network in which distribution, transportation, and logistics are integrated into real-time planning processes. Supply chain visibility design and analytics – SAP SCM gives you network wide visibility across your extended supply chain to perform strategic as well as day-to-day planning. The application also enables collaboration and analytics, so you can monitor and analyze the performance of your extended supply chain using predefined key performance indicators (KPIs). SAP SCM can help you transform a traditional linear supply chain into an adaptive network with the following array of benefits: -Faster response to changes in supply and demand – With increased visibility into the supply chain and adaptive supply chain networks, you can be more responsive. You can sense and respond quickly to changes and quickly capitalize on new opportunities. Increased customer satisfaction – By offering a common information framework that supports communication and collaboration, SAP SCM enables you to better adapt to and meet customer demands. Compliance with regulatory requirements – You can track and monitor compliance in areas such as environment, health, and safety. Improved cash flow – Information transparency and real-time business intelligence can lead to shorter cash-to-cash cycle times. Reduced inventory levels and increased inventory turns across the network can lower overall costs. Higher margins – With SAP SCM, you can lower operational expenses with timelier planning for procurement, manufacturing, and transportation. Better order, product, and execution tracking can lead to improvements in performance and quality – and lower costs. You can also improve margins through better coordination with business partners. Greater synchronization with business priorities – Tight connections with trading partners keep your supply chain aligned with current business strategies and priorities, improving your organization's overall performance and achievement of goals.
  22. 22. Oracle Supply Chain Management (SCM) Suite Oracle Supply Chain Management (SCM) is a comprehensive suite of applications with open and flexible architectures, best-in-class capabilities, complete functional coverage, and both integrated and modular deployment options. Being open, integrated, and complete allows Oracle SCM to transform your operations from a functional necessity to a value-driven competitive advantage. Using Oracle’s best-in-class suite of SCM solutions, companies can transform their operations across the demand, supply and product pillars to deliver operational and innovation excellence. With Oracle SCM solutions companies can reap the following benefits: -Sense, shape and respond to demand using best-in-class demand management and a complete suite of value chain planning applications Adapt and fulfil demand with best-in-class transportation management and a complete value chain execution suite of applications Accelerate innovation with best-in-class product lifecycle management and complete product value chain management Optimize all supply management costs, reduce risk & supply volatility with performance driven supply management Drive functional, enterprise and value chain alignment with best-in-class sales and operations planning and integrated business planning JDA Supply Chain Planning & Optimization Manufacturers need to be able to generate multi-site manufacturing and distribution plans that respect materials and capacity constraints — and be able to quickly adjust those plans as demand changes to ensure that customer orders are delivered on time. JDA’s Supply Chain Planning solutions provide global, end-to-end supply chain optimization across procurement, manufacturing and distribution, enabling manufacturers to improve service levels, increase productivity, reduce operational costs and drive profitable growth. Transform your business by using JDA solutions to: Maximize on-time delivery and prioritize demand based on due dates, customers and demand types across the supply chain Coordinate production plans across in-house and/or outsourced manufacturing facilities Reduce inventory levels across procurement, manufacturing and distribution Support materials requirements planning for centrally managed items
  23. 23. Other Major Key Benefits delivered by JDA Solutions are: -Delivering Rapid ROI: -- With JDA’s Supply Chain Planning & Optimization solution, you can leverage and extend the value of your current ERP transaction system investment. Built on the highperformance JDA® Enterprise Architecture solution – proven worldwide in hundreds of production deployments – JDA’s solution seamlessly integrates with any ERP or legacy system, including SAP and Oracle, delivering new supply chain performance and optimization levels previously not possible. This low-risk, stable and proven solution will not only reduce your supply chain costs but also minimizes impact to your operations. Integrated Optimization & Visibility: -- Only the JDA Supply Chain Planning & Optimization solution suite provides the scalability, flexibility and depth and breadth of capabilities necessary to address the complete, integrated supply chain process and achieve consumer-centric, adapted demand – while also extending the value of your current transaction solution investment. JDA’s solution also enables you to enhance sales and operations planning (S&OP) processes by ensuring alignment with strategic business plans providing capabilities that include demand shaping, optimized constrained distribution and production planning, robust reporting and advanced scenario planning. Modular Phased Approach: -- This powerful solution does not require a comprehensive, extensive implementation up front. All of the Supply Chain Planning & Optimization applications reside on a single platform with a common security model and an integrated data model that enables minimal data maintenance, zero custom integration, easy reconfiguration and infinite scalability. Since the system is modular yet integrated, it can be implemented in phases that deliver rapid benefits on your business’s high-priority needs. Managing Multiple Levels of Customer Demand: -- Using intelligent forecasting algorithms for utmost accuracy, JDA’s Supply Chain Planning & Optimization solution enables you to manage and reconcile demand across multiple levels of hierarchies and multiple attribute groups down to the SKU, customer and point-of-sale (POS) level for all planning horizons – short term, medium term and strategic. Driving business performance and productivity, users will no longer have to rely on laborintensive, time-consuming spreadsheet exporting, importing and macros in order to manage the appropriate granularity of demand. JDA’s solution also uniquely provides you with an integrated demand signal repository within the demand planning environment, complete with analysis and reporting capabilities. Recommendations As Sobeys needs to integrate a large number of Supply Chains across 25 distribution centres to single application in which each unit can speak to other and also reduces the inventory & operational cost, the company should go for SCM implementation and that too with JDA’s Supply Chain Planning & Optimization solution. As discussed in the business case the advantages of JDA’s solution over the
  24. 24. other two SCM packages which are being compared here are numerous. The return on investment for JDA’s implementation is better than the other two packages and also JDA has been among the market leader in the innovative supply Chain Solutions and there have so many testimonials for the increased efficiency and customer satisfaction for JDA’s. Moreover the acquisition of i2 technologies by JDA has further enhanced the portfolio of Supply Chain Management packages & solutions. Risk Management Technology Risks: -The Application might not respond properly to the current data traffic SAP implemented has some bugs in it that limit its functionality like failing to generate daily report Problems in migrating existing data to new system Technology Obsolescence Piracy People Risk: -Lack of skilled resources Training required to be given to Sobeys Inc. Resources are not available Lack of role clarity between the resources People living in between the project Organizational Risk: -Resistance from staff at Sobeys Inc. Organizational structure is restructured so that different managements are responsible for the projects. Organizational problems reduce the project budget Requirement Risk: -Requirement may change once the project starts resulting in major rework Customer fails to understand the impact of requirement change Estimation Risk: -The time required for SCM implementation is underestimated.
  25. 25. The modules of SCM selected to integrate overall application can be underestimated. Risk The application might not respond properly to the current data traffic SCM implemented has some bugs in it that limit its functionality like failing to generate daily report Problems in migrating existing data to new system Probability Impact Moderate Catastrophic Moderate Serious Moderate Mitigation Strategy Plan the transition and Keep the back-up options ready Serious Plan the transition from the legacy software to the new solution and keep the back-up options ready Serious Continuously monitor the external environment Tolerable Proper SLA’s with all vendors & dealers and slowly making them trustworthy partners Catastrophic Alert customer of potential difficulties and the possibility of delays Tolerable Prepare a well documented resource hiring plan for specific skill set Technology Obsolescence Moderate Privacy High Lack of skilled resources High Training required to be given to Sobeys. Resources are not available. Lack of role clarity between the resources Moderate Moderate Tolerable Resistance from Sobeys staff Low Serious Organizational structure is restructured so that different management are responsible for the project Organizational problems reduce the project budget Requirement may change once the project starts resulting in major rework Customer fails to understand the impact of requirement change The module of SCM selected to integrate overall application can be underestimated High Serious Low Catastrophic Moderate Serious Moderate Low Alert customer of potential difficulties and the possibility of delays Make documented and clear roles/responsibilities before the project starts Inform them about advantages of SCM implementation Prepare a briefing document for senior management showing how project is making a very important contribution to the goal of the company Same as above Devise traceability information to assess the requirement change impact, maximum information hiding in the design Tolerable Prepare a briefing document to tell how the project will be impacted because of requirement change Catastrophic Constant monitoring at each phase of project with proper checks
  26. 26. Risk monitoring table Risk Technology People Organizational Requirement Estimation Indicators calling for attention and monitoring Many technology problems, Problems in integration Poor staff morale, Threat of job retention, poor relationship among team members Organizational gossip, Lack of action by senior management Change in management plan, Indecisive and non-committal response from client and customer complaints Failure to reach the schedule delay

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