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Keda case analysis- ERP Implementation
Keda, a Chinese manufacturing company, implemented an ERP system to address inefficiencies from its previous system. The company evaluated several ERP options before selecting SAP. The implementation was challenging initially and faced resistance, but the company was committed to the process. After overcoming issues, Keda realized significant benefits like improved data accuracy, increased production, and better decision making. Moving forward, Keda's IT department should focus on communication, training, testing, and adopting new technologies to support the business.
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Introduction of Keda and the analysis team members for the presentation.
Overview of Keda's business functions, culture, revenue, market share, and focus on innovation.
Keda's challenges include inefficiency, competition pressure, growth issues, and inventory management.
Details on ERP system selection, implementation steps, and initial performance improvements after ERP.
Relation of ERP implementation to business growth, pressure for innovation, and the need for a replacement system.
Keda's process of selecting an ERP vendor, cross-checking client experiences, and final choice of SAP.
Resistance from staff, technical problems, and data transfer challenges during the ERP implementation.
Big-bang approach led to improved data accuracy, production efficiency, and better cost management.
Recommendations for Keda's IT department including communication improvements, employee training, and technology adoption.
Key factors for successful IT project implementation include user involvement, management commitment, and effective communication.
Closing remarks from Group 6, concluding the presentation.
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Keda case analysis- ERP Implementation
- 1. Keda Analysis ITM - Group6 Akrati Chauhan Arpan Chhabra Girish Khatri Rachna Gupta Shrivas Dheriya Vaikunth Kossambe 2020006 2020016 2020026 2020046 2020036 2020056
- 2. Overview of theCompany Q0
- 3. • Business Functionsoperated Autonomously • Freewheeling Corporate Culture • Non-standardized Processes, low volumes & High margins • Pursuit of Perfection • Endless Innovation Overview of the company Revenue Market Share Product & Management Innovation LEADER
- 4. Challenges faced byKEDA • Duplicated Process --> Redundancy and Heightened Cost • Inefficiency to make strategic decisions due to fragmentation of information • Lack of Integration ---> Suffering to face local and foreign competition • Pressure from Chinese Government Agencies for innovation • Inventory Management ⚬ Inability to properly assess the cost and profitability of orders ⚬ Inability to meet the making demand due to suboptimal usage of resources • Rapid Growth --> Expanded Product Offering ---> Multiple Plants ---> Outgrow of MRP II • Maintenance Support Ceased by BRB IT Co by MRP vendor Need of the hour - Rethink IT
- 5. • Selection ofERP system, developing the business use case, identification of project manager, and formulating the system architecture • Evaluated various ERP suites and shortlisted SAP • Assembling an implementation team consisting of members from all the business units • Configuring and implementing the software and usually is disruptive to organizations' performance. • Modify and streamline its operations and workflow and had to revamp the organization structure. • Users were trained parallelly to test the system. • There were technical problems, production delays, and resistance from the users in adopting the new system. Process Adopted Planning Implementation
- 6. Process Adopted Cont.... •The organization sees incremental improvements in its performance. • After one year of ERP implementation, able to produce 30 machines per month compared to 6 per month previously. • Implementation problems are fixed and the company’s performance improves in this case. • Any further requests from the users were rejected until the project was stable. Stabilization Improvement
- 7. Q1 IT planand Business plan Relation • There was inefficiency in inventory management and discrepancies in profit/loss accounts. These were overcome by the use of SAP’s MM module • The optimality in the utilization of resources was improved by using production planning in ERP • There was a lack of integration on many fronts compared to the competitors and there was pressure from Chinese Govt agencies to promote innovation. Keda’s ERP implementation is seen as a reaction to this. Keda’s Growth rate and Distinctive competences’ influence on IT plan Keda had diversified its product & business lines. It had to open multiple plants as single plant was not capable of supporting diversified lines. The MRP-II could not support multi-plant operations. Also, the vendor of MRP-II had stopped maintenance support. These incidences had influenced Keda’s IT plan.
- 8. Why was packagedERP chosen in place of developing software? • Keda was out of time • There was an urgent need for a replacement system as their MRP-II vendor had ceased providing maintenance support • The company lacked IT expertise • It would be expensive and time-consuming to build a large team for such development • Successful implementation was far from guaranteed • Customising an existing system would be faster, cheaper and of higher quality than building one from scratch Q2
- 9. • Keda contacted20 software vendors- both local and global • They were invited to visit Keda for detailed assessments • Keda visited their existing clients for crosschecking, to compare real production environments in the industry, and to understand the possible complications in the implementation process • 9 vendors were shortlisted for an RFP so that Keda could compare vendor offerings • These vendor offerings were rated according to the company’s strategic management goals • SAP emerged as the winner as it was sophisticated, feature-rich, and supported complex operational processes across multiple production plants How was package (SAP) and partner (Digital China) decided? Q2 • Personnel from Digital China were appointed to provide consulting support • Project managers were assigned from both Keda and Digital China
- 10. • Resistance frompersonnel to use the new system, fearing that it would lessen their authority. • Conflict-of-interest among departments while designing and implementing the ERP. • Ensuring participation of departmental managers by posing forced compliance actions. • Production delays, technical problems after the implementation of ERP. • Data in an organization is huge. Transferring the data to the ERP system is very tedious and easily prone to error • Some redundant activities were made compulsory to comply with the ERP system. Challenges faced in implementing ERP in KEDA Q3
- 11. Q4 Zhu decided toexpedite the implementation process and used an aggressive big-bang approach to integrate the system. And even though the company faced a few problems initially, the company soon realized the benefits. Implementation
- 12. • Data accuracy,including that for production planning and inventory management, improved from 85% to 98%. As the information was more accessible, it was easy to trace prices for materials purchased. The company was able to do price analysis conveniently. • The improved information flow enabled enhanced market responsiveness for the company, decreased stock holdings, significantly better delivery time, and a faster monthly financial reconciliation. • Machine press production jumped from 6 presses per month to 30. Information is power. The streamlined flow of information allowed the company to ramp up production and reduce waste. ERP Implementation and Benefits • The company also had a great revelation. Through cost analysis enabled by ERP, they realized that the cost of a polishing machine they sold in US markets at US $50,000 was actually US $52,512. • Now capable of making better decisions, the company opted to focus on controlling costs instead of pushing their product in the foreign market. Q4
- 13. Q5 Recommendations forthe future course of action for IT department of Keda of ERP • Detailed Communication Plan A common platform for business heads of different departments to share their decisions, feedbacks, and other updates fortnightly. ⚬ Increase access to information for everyone, especially in the new normal. ⚬ Will allow managers to share new ideas for the business • Training and Development of employees to have more expertise in software testing • Need to regress testing strategy • Hiring the right personnel for any ERP project implementation. For Eg., Dr. Fan Zu played a key role in the success of the project • Technology is ever-changing, the IT department needs to keep up. In this case, KEDA needs to be ahead in adopting new software and their versions to tackle competition
- 14. • ERP implementationproject - Part of a bigger computerization plan to improve the company‘s productivity. • Keda remained committed to the computerization plan originally set out. For instance, the Manufacturing Execution System. • Keda with the help of ERP is strategically positioned to reap the benefits of computerization. Future of ERP Q5
- 15. Conclusion • Involvement ofkey users right from initial stages, commitment of higher management, seamless communication between different participants, efficient selection of proper option, defining and sticking to a timeline are some ofthe key factors which ensure success of implementation of an IT project. • Cultural context can be used to ensure success of a project • Keeping senior management informed proactively can avoid bigger problems and also their involvement can be used to drive success of a project without facing resistance from key stakeholders. • Information is power. The streamlined flow of information allowed the company to ramp up production and reduce waste. Takeaways from the case study
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