This action might not be possible to undo. Are you sure you want to continue?
WHY AND HOW THEY WENT FOR ERP IMPLEMENTATION
Past: Founded in Minnesota during World War II. Manufactured and distributed industrial process equipment used in production of rubber and latex.
Quality: Known for design quality, innovative engineering and feature rich products At best: US $8 billion in terms of revenues and had 30000 employees at its peak.
from this exercise were: Give higher priority to manufacturing process Give higher priority to order fulfillment . layoff reduced strength to 20. introduction of simpler and cheap machines closed 3 plants.000 Mid 1990’s (back to profit) Important learning regarding further driving down cost.Market Shift Mid 1980’s (Loss era) Severe competition from 3 strong foreign competitor Cheaper machines Machines with lesser quality and lesser features Vandelay took series of steps: lean production rationalization of product line.
had its own MRP Specialized software for Forecasting Capacity planning Human resource management at some of these sites. (lesser responsive) . Fragmented systems added time and cost to production cycle: Scheduling: Because of no connectivity between different MRP across plants. the manufacturing plant production plan had to be manually entered into the assembly plant systems.Information systems status Fragmented Each plant (currently 8). Though company had central corporate financial info system with connectivity to each site (it shows the need for integration of systems). It had be done manually each week such that no other inputs were allowed during the week.
If request do not line up with months production plan. late shipments resulted. hence info.Information systems status Fragmented • Forecasting & planning: Forecasting was done in form of monthly buckets while the customer orders requested delivery within a week. whole data need to be manually entered at new location (confidentiality. (redundant. time delays in fax etc) • Human resource: When employee transferred from one location to other. redundant. time consuming) • Financial and accounting: manufacturing S/W used were not linked to financial package. errors. (not aligned with actual customer demands) • Order management: Orders taken manually and sent through fax and hence keyed into site’s order entry system (prone to lose orders. potential for error. time consuming. like labor hours charged per job etc had to be entered manually in both systems. periodic reconciliation) .
Action-Solution 1995 Decided to implement SAP R/3 to end the existing fragmentation through process standardization and integration. Enormous efforts in terms of: Technical details for H/W and S/W Business practices changes Experts involved: Deloitte & Touche Consulting Group ICS Project Leader – Kramer .
Business Practices at Vandelay George Hall. Varied Operations Practices No uniform Invoicing No Defined process raw material quantity verification Quality inspection Prioritization of work-orders Tracking of backlogs . Kramer is confused about: How to respond to his request for training How to let him and other plant managers know that all decision about R/3 were not under their control. plant manager excited about getting R/3 implemented . He assumed that kramer would be free to modify the system at will.
Kramer is confused about: How to respond to his request for training How to let him and other plant managers know that all decision about R/3 were not under their control. He assumed that kramer would be free to modify the system at will. . Enormous efforts in terms of: Technical details for H/W and S/W Business practices changes Experts involved: Deloitte & Touche Consulting Group ICS Project Leader – Kramer George Hall. plant manager excited about getting R/3 implemented .
SAP Company Background One of first ERP vendors (Est. 1972) 3rd Largest software company in the world Successful predecessor R/2 for mainframe systems $710 M sales in 1995 in N.The Software Vendor . America SAP R/3 capitalized on Client-Server architecture Powerful and flexible computing technology Better GUI Ease of Use Ease of Integration Scalability More – Open standards .
logistics. and HR Integrated all the modules Centralized database accessible by all the modules Marketing Strategy Partnership with most large consulting firms Marketed as broader business strategy . manufacturing. order management.Success factors of SAP R/3 Client – Server technology Large firms moved from Mainframe to Client-Server architecture – R/3 was made for Client Server architecture Modularity. Functionality and Integration Included financials.
SAP Growth .
which created dependency on a few people who were experts in it. 4. Interfacing R/3 to other packaged software serving as ‘point solution’ for specific tasks. Modifying the R/3 source code directly. Added functionality: R/3 system could only satisfy 80-95% of a large company’s sepcific business requirements.R/3 Usage: System configuration Configuration Tables: To meet company’s specific requirement. 2. 3. . Developing custom software that extends R/3’s functionalities and was accessed through standard application program interface. settings of R/3 configuration tables were changed. 8000 tables of R/3 define the looks and working of transaction screen. Interfacing R/3 to existing legacy system. Table configuration activity had to be replicated for all relevant processes which needed time and expertise. Remaining functionalities can be obtained in four ways: 1.
It became $1Billion in 1995 and employed 8000 professionals in more than 100 countries. Deloitte & Touche group/ ICS was subsidiary of group which specialized in SAP implementation offering complementary software. SAP had named ICS as an R/3 clobal logo partner. . SAP offers the following to ICS: R/3 system for internal training. ICS has won SAP’s award of excellence and had most of employees over two years experience.The Consultants: Deloitte & Touche consulting group / ICS Company Backgroung: The consulting group has been into consulting since 1950’s and accounted for over 15% of Deloitte & Touche revenue by mid 1990’s. To maintain the partnership. Access to SAP infoline. Education & training and consulting in BPR and change management. Regular R/3 logo partner forums and workshop. Second level support from SAP consulting (consultant hotline).
Technology enabled change According to Kramer there are two approaches to handle changes at strategy. process. As the Vandelay is going with SAP implementation . The approach is shown in figure below: . 2) technology enabled change – primary technology is selected early and more strongly influences other three dimensions and still enables overall business change. people and technology level: 1) Clean sheet – all 4 dimensions of change are explored without constraints. ICS used a structured approach as per the client’s situation.
THE VANDELAY PROJECT Time Estimate The Vandelay Project’s implementation would require 18 months. 4 order entry locations and at corporate headquarters in Minnesota. R/3 software to be implemented at Vandelay 's 8 mfg sites. Two-thirds of employees would need training on how to use new system . Plant installations would require a lengthy preparation period to align ops with the new business practices.
including hardware. Initially. and salaries. testing. software.THE VANDELAY PROJECT contd… Effort Estimate Full time effort of 50 people including consultants( process re-designers and SAP specialists) and employees Part time involvement of many employee at each site. the emphasis would be reversed: 80% concentration on SAP implementation and 20% on process design. Budget Estimate $20 million. . In the later phases. the project team would focus about 80% of its effort on designing the “to be” process model of the organization. during the activities of system configuration. consulting fees. and delivery. and 20% on issues related to system implementation.
planned change in mfg. planner/buyers. consisting of Division VPs. strategy. This team would address implementation specifics.Team Structure Two team for managing the project Steering committee Project team Steering Committee. 20 member team. financial accountants. consisting of operations employees. e. . This team would address issues related to Business Strategy like sequence of site installations. The team would meet monthly.g. Project team. 8 member team.
Or. mandate that the team contain at least one representative from each of Vandelay’s implementation sites around the world. .Team structure contd… According to Kramer. participants for the project team could be selected on any of the following basis: Present a list of required skills and characteristics for team members to the seniorlevel management and ask them to nominate people.
Each plant however had developed its own internal part numbering system over time. Autonomy Challenges Strong tradition of encouraging innovation and autonomy. R/3 required each item to have a single. unique part number across all sites. Replacing them would be major task . into following categories: Centralization vs. Standardization on externally defined best practices be incorporated into the project as a starting point or final word. involved in assisting a large organization as it attempted to change and standardize its practices. So should tinkering be encouraged or should systems and processes be locked down as much as possible? The implementation team would have to ensure that any universal processes did not run a foul of local ones.Managing Change Kramer placed the challenges.
Kramer had to tackle this and decide on what she and early movers could do about it. but most employees remained skeptical for a long time. Inevitability: Even with committed change agents in place. Companies committed substantial resources upfront and stated clearly that the new system was a given. . Change agents and Organizational inertia Early leaders: People who are enthusiastic about the work of change and are respected within the company. most people did not completely accept a new system until they really believed that it was inevitable.
Software Although R/3 had broad capability. 3. Three primary alternatives to addressing this situation: 1. Extend the R/3 system to precisely match the business requirements. Change the business process to match the capabilities of the software. there would be situations where it would not exactly fit the desired Vandelay process design. Interfere R/3 to another package or custom solution. 2. .
THANK YOU .
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.