The Actions Of A Chocolate Firm Regarding The Design, Implementation, And Operations Of Their ERP System.

The Actions Of A Chocolate Firm Regarding The Design, Implementation, And Operations Of Their ERP System.

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Analyze the following phases of the chocolate firm’s ERP system project:

· Steps of the design phase.

· Steps of the systems implementation and conversion phase.

· Steps of the operation and maintenance phase.

Based on your analysis of each phase of the ERP system project described in this case study, design the risk management steps that would have avoided the disaster encountered by the chocolate firm had they already been in place at the beginning of the project.

Case Study

The largest premium chocolate manufacturer has B2B and B2C customers. It implemented the Enterprise Resource Planning (ERP) as its centralised database in 1999. It is a practical application for inventory management.

This case study focuses on value adding to the supply chain via information sharing and information quality. Several information-sharing issues have been identified. They include lack of understanding of ERP’s potential, IT skill gap, resistance caused by legacy of previous systems and a disorganisation in transportation.

Theories examined in this report focus on information quality and information sharing. Although certain information is considered to be confidential and commercially sensitive, recent research in management underlines the benefits of sharing business intelligence. The main tools are concepts that recognise collaborative planning, forecasting, and replenishment to develop a mutual interest for partners and customers.

Implementation of the theories requires time. However, time is not at disposition. The necessity to implement a strategy with immediate result can offer a consensus between short-term and long-term necessities.

Recommendations include the creation of a training department. The purpose of this is to encourage a collaborative planning approach amongst all participants of supply chain. It is of utmost importance for this firm to monitor its performance, and surface problems to the board’s attention as soon as possible.

In conclusion, this firm’s has several areas of concern, such ass dis-organisation in transportation and training of employees. On the other hand, it is in its early stage of collaborative planning and a wonderful product.

Introduction

This report focuses on value adding to the supply chain via information sharing and information quality. Information is one of the most significant factors for a business to gain competitive advantage by improving communication and processes to produce quality goods and services.

This case study examines the operation of Chocolate company subsequent to its implementation of the Enterprise Resource Planning (ERP) system in 1999. Specific problems are identified and solutions are recommended for process improvement to add value to the supply chain.

Background

The chocolate firm was established in 1900 in Pennsylvania. Its client base is B2B and B2C. Its head office and distribution centre are located in Philadelphia and Chicago, prime manufacture is in Guadalajara, Mexico 7. Supply of raw materials does not pose a lead-time problem, however, transportation from the Guadalajara factory to Chicago distribution centre and transit bottleneck have contributed to lead time.

This firm has implemented the Enterprise Resource Planning (ERP) as its centralised database in 1999.

Problem Identification

A number of information sharing and information quality issues have been identified:

Lack of understanding of ERP’s potential

Many researchers have suggested that information sharing can substantially improve overall supply chain performance(Scott & R, 1991)(bowersox & closs, 1996)(Closs & A, 1998)(Shapiro, 2001).Management does not understand how ERP can potentially assist this firm in maintaining quality information and information sharing, e.g. sales orders, inventory control, delivery and forecasting demand. Such information sharing can improve transaction efficiency and reduce information delay along supply chain, create value so participants can gain competitive advantage(Handfield & Jr, 1999).

IT Skill Gap

The impact of not understanding ERP’s potential was compounded by inadequate training provided prior to implementation. Employees are unable to use ERP confidently and data entry errors affect information quality to ensure information flow and forecasting accuracy.

Legacy of Previous Systems And Experience Cause Resistance

There is a legacy and negative experience with previous systems implemented. Although some employees embrace ERP’s implementation and actively use the software, others have resisted this change. The IT skill gap has also contributed to the resistance in using the software. Therefore, information sharing is ineffective as supply chain management (SCM) depends on what, when, how and with whom information is shared (Chizzo 1998;)(Finch, 2006)(Holmberg, 2000)

Parallel Ordering System.

Some employees use a parallel ordering system of fax, phone, and email. This firm is unable to analyse the ordering history in the system to forecast demand accurately (Finch, 2006). The parallel ordering system undermines the quality of information sharing, particularly in aspects of accuracy, timeliness, adequacy, and proper information formatting(Gustin & Daugherty, 1995)(Closs & Goldsby, 1997)(Monzcka & Petersen, 1998)(Moberg & Cutler, 2002).

Appendix A indicates significant problems in information flow and forecast accuracy, particularly in the areas of warehousing, distribution and customer services. Task 2 in Appendix B indicates employee resistance in using the ERP software and parallel ordering system are the major causes of delays in the supply chain. As a result, this firm is incapable of generating value in providing quality customer services. Poor customer services can become a product loser that will repel this firm’s customers(Finch, 2006).

Excessive Transportation Lead-Time

This firm has 138-day lead-time. The sharing of information and co-ordination of strategies among firms in a supply chain can both reduce total logistics costs and enhance value delivered to the customer(Cooper & Ellram, 1997) (Brewer and Speh 2000). Good information sharing is important for creating effective collaboration or strategic alliances (Dyer & Singh, 1998)(Handfield & Jr, 1999)(Henriott, 1999)(Mariotti, 1999). Supply chain partnership as a relationship between two independent members in supply channels, such as customers and manufacturers, or manufacturers and suppliers, through increased levels of information sharing, can achieve specific objectives and benefits in terms of reductions in total costs and inventories(Yu & Yan, 2001). In this organisation case, it can build relationship with transportation providers, raw material suppliers, B2B, and B2C customers for collaborative planning, forecasting, and replenishment(Finch, 2006).(Novack & Langley, 1995) (Jones 1998).

Theory

Quality Management

Quality management is used to break down barriers between departments. Capacity of suppliers should be used to their potential. The most frequently used framework for guiding improvement is Shewhart’s Plan, Do, Check, Act (PDCA) cycle(Finch, 2006).

What is Quality Management?

For inventories: Quality management is matching production to demand in a short period. High level of standardisation and shorter delivery period reduce holding costs. Relationship with suppliers is primordial to the level that they work like a single entity. Its disadvantage is that any external events can stop production, especially when production is matching demand of the next half days. This organization appears to have adopted this theory. However, the failure is internal rather than not being able to develop and maintain a relationship with suppliers.

For capacities: Quality management means all processes are redesigned to eliminate unnecessary steps in production. Equipment configuration is arranged around the most efficient flow of production. Procedures are standardised for training purpose to eliminate errors from deviation. With the help of automation, this process will maintain a constant quality of production. Its disadvantage is that the equipment has limited flexibility when changes in process occur. It also has to accommodate a maintenance schedule outside peak production. This firm redesigned its processes when it implemented the ERP system in 1999. However, it has failed to communicate the redesign to ERP users and update their job descriptions to reflect the new requirements.

For facilities: Organisational setting is likely to approve small independent production with limited interference with other production. This will reduce handling damage and processing error during shipping. This firm has put this theory in practice successfully with no complaint of inventory stock out.

For employees: Quality management empowers employees to control their environment and take responsibility of their work. This allows them to correct error directly to the source. They can become multi-skilled in all procedures; that subsequently generates value for employee and employer. In this company case, this is the area of incompetence in ERP users and coordination of transportation.

Quality management is responsible for driving improvement and self-education programs. This is to ensure that employees have the adequate skills to perform their task, or just to keep up-to-date with technology. This is a failure of this company’s management; it is noticeable in several areas of the company that employees do not have the sufficient capability to work competently to generate value in the supply chain.

Business Intelligence

Information Quality

This theory is applicable to this firm; its incorrect data is not the only cause of error. Analysis suitability and data interpretation (Appendix B refers) are more likely to affect the accuracy of forecasting. Information is distributed in several formats to meet each purpose. This will reduce the risk of inadequate reading and understanding. Collection of information is not only about the “customer”. It is a two-way communication; customers can have information from the supplier like capacities and technology at their disposition. Converters could use the same principle to adjust their performance to the supplier demand.

The Actions Of A Chocolate Firm Regarding The Design, Implementation, And Operations Of Their ERP System.