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Implementing enterprise resource planning (ERP

)
systems in small and midsize manufacturing firms
Joseph R. Muscatello
Infiniti Systems Group, Brecksville, Ohio, USA

Michael H. Small
Department of Management, University of the West Indies, Bridgetown, Barbados, and

Injazz J. Chen
Department of Operations Management and Business Statistics,
College of Business Administration, Cleveland State University,
Cleveland, Ohio, USA
International Journal of Operations & Production Management Vol 23 No. 8, 2003
Presentation by ;

Habil Olaka , # 602546

Introduction • successful implementation ->strategic. >$100m). but ERP vendors now turning to SMEs • Research gap • Research – multiple case study approach to investigate ERP implementation in SME manufacturing firms in US based on field studies of 4 projects . operational & information related benefits. or else financial doom • Most information on success & failures based on large firms (inv.

increase profitability • Reducing manufacturing lead times • Some ERP implementation were disasters: • Fox Meyer Drug ($5 bio company) filed for bankruptcy-incorrect orders led to excess shipments • Dell Computer – scrapped the ERP system for lack of flexibility • Managerial issues – planning to implementation main cause . modules share & transfer info. eliminating multiple entry of same data • Improves customer satisfaction • Reduce inventory costs. 20% total failure) • Lack of resource hence piecemeal approach • Low IS staff levels for the rigorous and extensive IT training and development • ERP integrates all functions. centralized in a single relational database accessible by all modules. improve efficiency.Introduction (cont’d) • SMEs not rushing into ERP installation because: • Failure rate high (conservatively 40% partial.

Case Studies • Case study methodology ideal for improving conceptual and descriptive understanding of complex phenomena. • Longitudinal methodology and selects four manufacturing facilities and collected data using: – direct observation. . interviews etc. attend project-team meetings. historical records. observe causality.

• Justification and selection activities • Economic and strategic goals (savings – inventory holding costs. volumes too high for current system etc. C.ERP Implementation process • Planning activities • Strategic objectives and top management involvement (HQ driven. executive sponsor at VP level) – A. independent consultant) • ERP profiles of the companies (A.B.C relative sophisticated.) . head ) • Economic and strategic justification (investment appraisal techniques-pay back period. D basic accounting /finance/production. ROI. customer service level. B. ROA. D • Reengineering efforts • ES needs analysis (in-house vs.

meetings. limit time and cost overuns) • Overall project performance (full integration so no entry of data twice. exec. hiring. on-time delivery. training) • Project monitoring and reporting (team reports. Mgt involvement) .ERP Implementation Process (cont’d) • Installation activities • Education and training requirements (reassignment /replacement.

mgt and operator education and skills audit • Executive and divisional mgt – develop effective communication and team building skills. • Link ERP investment to strategic planning • Reengineering before ERP selection • Needs assessment – extended to cover hardware requirements. C&D had them leave.Discussion • Executive management commitmentcommitted sponsor chosen. for these multi-layered project teams .

g. more detailed studies needed to develop theory in area. • Challenges experienced similar to those in manufacturing technologies e. MRP II & CIM and the successful firms concentrated on areas identified for success in MRP II & CIM . especially human factor related activities • Future studies to focus on if there is 1-to-1 matching of successful implementation actions across all integrated technology adoptions .Conclusion • The 4 cases diverse enough to illustrate common traits for successful ERP implementation. =>common traits in implementation of modern technologies.

References • 39 references of which 8 text books • Journal articles reasonably recent at most 5 year old i.e. 1998 .

should have considered geographical distribution • Not typical SMEs as they were divisions of larger companies .critique • seems to generalize observations which is based on a non-representative sample • Sample selection may be biased and appear based on authors knowledge of implementation challenges at firms.

Findings (continued) .

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