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Seat No : 146
Puma had a manufacturing cycle of nine month that lacked proper control. In order
to increase their productivity and operational efficiency it wanted to have
Pumabetter control on their manufacturing cycle and eventually reduce it to six
months. The integrated system architecture of ERP system help organisations
integrate data and process from various departments and locations so that products
are moved faster, orders are processed quickly, customers are invoiced accurately in
time and shipments are reconciled rapidly. Thus, an ERP system owing to its high
processing speed and data accuracy help increasing overall operational efficiency
and productivity.
Software components refer to the set of operating instructions and logical programs
that are used to direct and control the activities of system hardware (Finney &
Corbett, 2007). It includes system software/ operating system platform, database
management system and application software.
People resources for an ERP implementation include end-users like clients,
employees, vendors and anyone who uses the system (J.Morris, 2011). IT specialists
like trainers, database administrators, developers and change management. Project
Manager is an important human resource who ensures that the complete
implementation team works in coordination with each other to achieve desired
business goals.
Once the hardware, software and people resources are identified it is important to
decide over important aspects of virtualisation, use of third part products, database
requirements and governance. Governance is an important part of ERP
implementation that is concerned with defining and outlining committees and
workgroups that will be responsible for different components of implementation,
how they interact and making decisions related to those components (Motiwalla &
Thompson, 2011). Different components of implementation include technical
development, functional components, hardware and software installation,
communications and reporting, project management, change management, budget
management, project owners and sponsors and escalation process. Roles and
responsibilities of implementation are divided among owners, project executive,
steering committee, application steward, chairperson, project management office,
project teams; project team leads and cross functional teams
Vanilla implementation and Chocolate implementation are the two most commonly
used implementation strategy (Addo-Tenkorang & P.Helo, 2011). Vanilla
implementation strategy is one in which organisations prefer to make considerable
changes to their business practices in order to fit the system instead of modifying or
customising the ERP system (E.O'Leary, 2004). This strategy is best suited for
businesses that have simple and common business practices. It is good for businesses
that lack the needed resources to build and change systems. Changing business
practices also serves as a competitive advantage in some situations. Chocolate
implementation is one in which organisations chose to customise or modify the ERP
system in a way that fits with the existing business practices (Finney & Corbett,
2007). It is a single-system instance thus is easy to maintain and support. It also help
in accessing organisational change as resistance to change and risk is greatly
minimised by customising the system so that it fulfils business needs. Modify the
ERP implementation strategy however require considerable focus on effective
knowledge transfer.
Vendor Selection:
Vendor selection is a crucial step in ERP implementation as it is essential to ensure
that the selected vendor fulfils needs and goals of the organisation. It is important to
have a well-defined vendor selection process in place in order to ensure successful
implementation. There are a number of consulting firms that help businesses select
most appropriate vendor. Two most important criteria for evaluating an ERP vendor
is the degree to which the ERP fits the business functions and the ERP product
performance in the market (Motiwalla & Thompson, 2011). A high level ERP
purchase process involves following predefined series of steps starting from vendor
research and information gathering, evaluation of vendor demonstrations,
assessment of needs and requirements, request for bid development, analysis and
selection that include evaluation of bids, technical and functional evaluation,
detailed demonstrations from vendor, reference checks and development of total cost
of ownership. Next step is vendor negotiation where contracts are reviews and
changes done if needed and prices for software, maintenance, support and consulting
are finalised. Once all the above steps are completed the ERP system is purchased
from selected vendor.
ERP systems are afforded by number of vendors in the market however some of the
most recognised ERP vendors are; SAP is the market leader of world’s ERP market
with 24% market share and provide solutions for industries of all types and sizes.
SAP faces competition from other vendors like Oracle, Microsoft, IBM, Lawson,
SSA Global, Infor Visual, Epicor, Great Plains and Plex Online (Motiwalla &
Thompson, 2011). It is important to review vendor documented processes to identify
their system functionality. The two main documents to be views are data and
functional flow of business processes and table of functions performed in each
department also presenting priorities assigned to each function.
The case does not give enough information about the vendor selection process
followed by Puma. No specific ERP vendor is named in the case. It is important that
management of the organisation give enough time to evaluate the system, review
detailed demonstrations and communicate effectively with references and other
organisations using the system. As Puma was looking for a single-instance ERP
system which would centralise their operations SAP would have been the best choice
for them.
Knowledge Transfer
Before the Go-live it is important to ensure that proper training has been delivered
to end-users and the knowledge transfer process is almost complete (E.O'Leary,
2004). Once the ERP system goes live the organisation needs to undergo a
stabilization process of 60-90 days. It is important to ensure that there is well-defined
and continuous process in place which works effectively so that knowledge and
skills are transferred to employees and team members during the implementation as
well as stabilisation process. Development of a knowledge transfer plan is important
to ensure that knowledge is transferred effectively as implementation proceeds from
one phase to another. It helps ensuring that knowledge is retained, cost of support is
reduced by reducing number of support calls, faster learning is facilitated, system
capabilities are enhanced and that system is used correctly.
Ineffective knowledge transfer and lack of proper end-user training was the main
reason behind the failure of demand planning system at Puma. They realised their
mistake and so in case of ERP implementation they ensures that employees are not
allowed to work on systems until they undergo a mandatory training for 140-180
hours. End-users were completely trained before the go-live which made them use
the system properly.