Enterprise Resource Planning

KEDA SAP IMPLEMENTATION

Submitted to: Prof. V. V. Nath

Submitted By: Group- 10

Date of Submission:9th September,2013

Table of Contents
Executive summary: .................................................................................................................................2 Situational analysis ..................................................................................................................................3 Introduction: ......................................................................................................................................... 3 Problem Statement: .................................................................................................................................3 Scope of the problem: ........................................................................................................................... 4 Objectives: ............................................................................................................................................... 4 Alternative courses of action: .................................................................................................................. 4 Evaluation of Options: ............................................................................................................................. 4 1)Developing In-House .......................................................................................................................... 4 Pros: .................................................................................................................................................. 4 Cons: ................................................................................................................................................. 4 2)Outsourcing to a 3rd Party Provider ...................................................................................................5 Pros: .................................................................................................................................................. 5 Cons: ................................................................................................................................................. 5 Decision:........................................................................................................................................ 5 Action Plan: ................................................................................................................................... 6 Future of ERP ................................................................................................................................. 6 EXHIBIT I .................................................................................................................................................. 7 Keda's history timeline .......................................................................................................................... 7

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Executive summary:
While Enterprise Resource Planning (ERP) system demand in China has been steadily increasing, many of such implementation projects failed. Keda Industrial Co. Ltd (600986: Shanghai Stock Exchange), a manufacturer of large scale machinery in China, however, was one of the few that successfully deployed its ERP solution in 2005. In this case study, we document the ERP initiative of Keda from its conception to its deployment, study the factors that contributed to its success, and summarize Kedas practices that substantiated the identified success factors.

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Situational analysis
The company first began its computerization in the year 2000. Dr. Zhu, Head of the IT department developed a major 5 year plan leading to conducting a wide status quo analysis and also to have an integrated organisation structure with streamlined data flows. After enquiring about several local and global vendors, KEDA shortlisted nine such companies out of which SAP emerged as a winner. The implementation team were formed that included key users, the consultants and the IT officers. With some clashes between the suggestions and interests of the key users and the module owners, the implementation went smoothly and speedily with the help of the senior management. The SAP was successfully installed in the company in the August of 2005. To expedite the entire process, an aggressive big bang approach and forced compliance by the users were adopted. It helped in increasing the data accuracy from 85% to 98%. Within months ERP implementation effort was a great success resulting in decrease in operation and management cost, and improved efficiency.

Introduction:

KEDA Industrial Company Ltd. (KEDA) founded in the year of 1992 is a Chinese ceramic machinery manufacturer company. Due to the nature of the primary products, all the departments of the company functioned independently and the problems were solved in ad-hoc manner. This helped the company to achieve efficiency in its operations. But things were not all rosy for KEDA as the disconnected business units often duplicated resulting in redundancy and heightened costs. This lack of integration also resulted in increased competition. Some of the other challenges that forced KEDA to go for ERP were governmental pressure and the issues related to inventory management.

Problem Statement:
The problem is that disconnected business units were leading to redundancy and heightened costs (very little information flow between departments). Current MRPII system does not support multiplant mode. Because of these there was lack of knowledge thus unable to assess costs and pricing policies.

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Scope of the problem:

There were challenges related to managing a large inventory. It was struggling through Struggled to meet demand due to production delays and resources and facilities not optimally utilized. There was Pressures from Chinese government agencies to catch up with foreign firms.

Objectives:
Improvement management control Improvement in Information quality

Alternative courses of action:

Developing In-House or Outsourcing to a 3rd Party Provider Outsourcing to a 3rd Party Provider

Evaluation of Options:
1)Developing In-House
Pros:
1) System developed would most likely take into account cultural contexts and practices and would potentially be easier for the key-users to adopt. 2) System would be developed according to the needs and functions of the company . 3) System would fit the business processes.

Cons:
1) Likely to be too time consuming 2) Not feasible considering the pressing need for a better system 3) Would be expensive and difficult as Keda does not have a strong IT team proficient in developing systems.

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2)Outsourcing to a 3rd Party Provider

Pros:
1) A vendor would have more experience and expertise in developing and deploying ERP systems. 2) System bought could be more effective and bug-free. 3) Off-the-shelf system would be customized and deployed quicker than developing one from scratch. 4) System could be deployed in shorter time to address the pressing issue of lack of integration and maintenance support. 5) The ERP system (SAP) is precisely what Keda's strongest competitor, SACMI, is using. So, Switching over to the same system erodes an edge that SACMI had over Kedaand better information management

Cons:
1) Vendor long-range support was questionable. 2) The vendor may not provide as comprehensive as support as purported since the vendor was located in another country. 3) As the customization of an off-the-shelf system is limited, certain business processes would have to be tweaked to "fit" the system

Decision:
The decision comes out to be implementing SAP rather than inhouse system. The reason being that the SAP itself is a reknowned name in the industry and the products are of optimum quality. Due to this Page 5 of 8

reason the company need not have to worry about the type of system and concentrate on its core competency rather than developing new system that might not work as well as SAP. Moreover as the SAP corporation is consistently working towards improvement of the system , the firm can take advantage of it, on other hand the company would have to consistently devlope its inhouse system in order to compete with its competior who is using SAP.

Action Plan:
The action plan is to implement the SAP as soon as possible so that the company can take advantage of it in properly managing the inventory and competitions with the competitor.

Future of ERP
Despite the success of the ERP implementation project, the initiative is part of a bigger computerization plan that would continue to satisfy the companys information needs and improve thecompanys productivity through better information management and dissemination for decision making. To fully capitalize on the centralized data and processes made possible by ERP, Keda remained committed to the computerization plan originally set out. Values were continuously created via disciplined new system additions and extensions. For instance, the Manufacturing Execution System, seamlessly integrated with ERP, tracked all manufacturing activities and provided real-time access to production progress and information. ERP is an enabling technology. With ERP, Keda is strategically positioned to reap the benefits of computerization. ERP serves as the core on which systems, such as Customer Relationship Management, Business Intelligence, and Supply Chain Management, are built to enhance customer management, optimize decision making, and coordinate vendors respectively. To Keda, ERP is a beginning, rather than an end.

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EXHIBIT I
Keda's history timeline

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