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Chapter 14 Enterprise resource planning (ERP) 417 Short case What a waste! 8 Not only can ERP implementation go wrong, even when undertaken by experienced professionals, sometimes it can end up in the law courts. Waste Management, Inc. is the leading provider of waste and environmental services in North America. In 2008 it announced that it was suing SAP (see earlier short case) over the failure of an ERP implementation. Waste Management said that it was seeking the recovery of more than $100 million in project expenses as well as ‘the savings and benefits that the SAP software was promised to deliver to Waste Management’. It said that SAP promised that the software could be fully implemented throughout all of Waste Management within 18 months, and that its software was an ‘out-of-the-box’ solution that would meet Waste Management’s needs without any customization or enhancements. Waste Management signed a sales pact with SAP in October 2005, but according to Waste Management, ‘Almost immediately following execution of the agreements, the SAP implementation team discovered significant “gaps” between the software’s functionality and Waste Management’s business requirements. Waste Management has discovered that these gaps were already known to the product development team in Germany even before the SLA (service level agreement) was signed.’ But members of SAP’s implementation team had reportedly blamed Waste Management for the functional gaps and had submitted change orders requiring that Waste Management pay for fixing them. Source: Alamy Images At a purely practical level, many consultants who have had to live through the difficulties of implementing ERP have summarized their experiences. The following list of likely problems with an ERP implementation is typical (and really does reflect reality). ● ● ● ● ● ● ● ● The total cost is likely to be underestimated. The time and effort to implement it is likely to be underestimated. The resourcing from both the business and the IT function is likely to be higher than anticipated. The level of outside expertise required will be more than anticipated. The changes required to business processes will be greater than expected. Controlling the scope of the project will be more difficult than expected. There will never be enough training. The need for change management is not likely to be recognized until it is too late, and the changes required to corporate culture are likely to be grossly underestimated. (This is the single biggest failure point for ERP implementations.) Summary answers to key questions Check and improve your understanding of this chapter using self assessment questions and a personalised study plan, audio and video downloads, and an eBook – all at www.myomlab.com. ➤ What is ERP? ■ ERP is an enterprise-wise information system that integrates all the information from many functions, that is needed for planning and controlling operations activities. This integration around a common database allows for transparency. ➔
418 Part Three Planning and control ■ It often requires very considerable investment in the software itself, as well as its implementation. More significantly, it often requires a company’s processes to be changed to bring them in line with the assumptions built into the ERP software. ➤ How did ERP develop? ■ ■ ■ ERP can be seen as the latest development from the original planning and control approach known as materials requirements planning (MRP). Although ERP is becoming increasingly competent at the integration of internal systems and databases, there is the even more significant potential of integration with other organizations’ ERP (and equivalent) systems. In particular, the use of internet-based communication between customers, suppliers and other partners in the supply chain has opened up the possibility of web-based integration. ➤ How should ERP systems be implemented? ■ ■ Because ERP systems are designed to address problems of information fragmentation implementation will be complex and cross organizational boundaries. There are a number of critical success factors (CSFs) that the organization must ‘get right’ in order for the ERP system to work effectively. Some of these are broad, organization-wide, or strategic, factors. Others are more project-specific, or tactical, factors. Case study Psycho Sports Ltd Peter Townsend knew that he would have to make some decisions pretty soon. His sports goods manufacturing business, Psycho Sports, had grown so rapidly over the last two years that he would soon have to install some systematic procedures and routines to manage the business. His biggest problem was in manufacturing control. He had started making specialist high-quality table tennis bats but now made a wide range of sports products, including tennis balls, darts and protective equipment for various games. Furthermore, his customers, once limited to specialist sports shops, now included some of the major sports retail chains. ‘We really do have to get control of our manufacturing. I keep getting told that we need what seems to be called an MRP system. I wasn’t sure what this meant and so I have bought a specialist production control book from our local bookshop and read all about MRP principles. I must admit, these academics seem to delight in making simple things complicated. And there is so much jargon associated with the technique, I feel more confused now than I did before. Perhaps the best way forward is for me to take a very simple example from my own production unit and see Source: Corbis/Mark Cooper
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sixth edition OperatiOns ManageMent
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Further reading in Operations Manag
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Pearson Education Limited Edinburgh
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Contents Guide to ‘operations in
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Contents ix Chapter 12 Inventory pl
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Guide to ‘operations in practice
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Guide to ‘operations in practice
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Making the most of this book and My
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Making the most of this book and My
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Preface xix Illustrations-based Ope
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To the Student . . . Making the mos
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About the authors Nigel Slack is th
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Publisher’s acknowledgements We a
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Part One INTRODUCTION This part of
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88 Part Two Design Figure 4.2 The d
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98 Part Two Design Figure 4.6 Proce
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100 Part Two Design Figure 4.8 Flow
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102 Part Two Design Given that an i
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106 Part Two Design The relationshi
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108 Part Two Design Summary answers
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110 Part Two Design the grant appli
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118 Part Two Design Figure 5.3 The
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120 Part Two Design Short case Squa
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124 Part Two Design Reducing design
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126 Part Two Design Figure 5.7 A QF
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128 Part Two Design Purpose Basic f
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130 Part Two Design Interactive des
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132 Part Two Design Early conflict
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134 Part Two Design Summary answers
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140 Part Two Design The supply netw
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146 Part Two Design Figure 6.4 Offs
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154 Part Two Design Figure 6.7 Cent
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158 Part Two Design Table 6.4 The a
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174 Part Two Design Table S6.3 Expo
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208 Part Two Design What is process
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252 Part Two Design Table 9.3 Examp
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Part Four IMPROVEMENT Even the best
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supply chains (continued) meaning 3
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