ERP casestudy

1. A Case Study of ERP
Implementation Issues
dr. Tom Bramorski
University of Wisconsin
USA

2. Introduction
 Medium size U.S. business
 1,200 employees
 Multiple, geographically scattered
manufacturing sites located in the
Milwaukee metro area
 Single finished product with a large
variety of custom options
 Multiple distribution centers worldwide

3. Introduction
 Bill of Materials with approximately 25
levels
 250 global suppliers
 Mature product, well established brand
name
 Demand consistently exceeds supply
 Production capacity shortage
 SAP R/3 ERP system

4. ERP Benefits
 Cross-functional process orientation
with high visibility
 Enables exchange of information
throughout the supply chain in real time
 Reduces operations costs
 Reduces cycle times
 Facilitates bottleneck identification and
management

5. 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

6. ERP Benefits
 Enhanced communication across
functional boundaries
 Emphasis on process orientation
 Enhanced integration across the supply
chain and business units
 Expanded information access with
appropriate user rights

7. ERP Benefits
 Enhanced 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

8. Specifically, ERP Benefits:
 Organization and it’s supplier chain
 Manufacturing and sales functions
 Inventory management
 Product distribution and logistics
 IT function by consolidating and
standardizing diverse legacy database
platforms

9. ERP Disadvantages
 Large 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

10. ERP Disadvantages
 Multiple 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 quantify
 Targets are rarely achieved
 Plans are too ambitious (time and $$$)

11. ERP Disadvantages
 Expectations are unrealistic
 Lack 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?

12. ERP Implementation Case
 Specific 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

13. ERP Implementation Case
 Phase 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

14. ERP Implementation Case
 Phase 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

15. SAP Modules Selected for
Implementation
 Materials Management
 Sales and Distribution
 Production Planning
 Warehouse Management
 Human Resources
 Business to Business

16. SAP Modules Selected for
Implementation
 Advanced Planning Optimizer
(Forecasting Tool)
 Financial Accounting/Controlling
 Costing, and
 Customer Relations Management

17. Implementation Schedule
 18 months allowed for complete system
implementation
 System simulations performed in May,
2002 using mock transactions
 Go-live in July, 2002 (slow business
period)
 IBM consultants retained to facilitate the
implementation process

18. Implementation Issues
 Since 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

19. Implementation Issues
 Since 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

20. Implementation Issues
 Since 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

21. Implementation Issues
 Since 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

22. Implementation Issues
 Since 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

23. 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

24. 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

25. Conclusions
 Develop benefit-focused implementation
plans supporter by specific business
cases
 Establish recognizable benefit delivery
processes