Cases 176ee

LG Electronics When the global giant LG Electronics – with 114 subsidiaries, and more than 82,000 employees across 40 countries – tried to harmonize its Human Resources (HR)functions, the challenges were of a similarly giant scale. High maintenance costs, local controls lacking transparency, inefficient decision-making, under-utilization of resources, manual processes, etc. made it difficult for LG to operate as a global company. So it decided to take the ERP route.

The challenges for LG included:     

Location-specific multiple systems leading to unclear top-level reporting, lack of optimum resource utilization Location-specific processes lacking transparency and automation needs for a global reporting Disengaged employees, limited outlook, no room for information or best-practices sharing Limited localized resources for employee learning and training Difficulties with decision-making, with significant business impact

LG’s familiarity with Oracle technology made it easier to finalize a solution. It offered large data hosting, seamless migration of old data, easy scalability, multiple modules addition as needed and centralized access and control. LG hired Oracle Consulting to build a single centralized system that integrates available Oracle HR modules for uniform use at global level, thereby replacing location-specific system dependency.

Achieved Benefits The ERP solution, which included a data mart, performance management system, staff portal and e-learning application, enabled the following benefits for LG:           

Centrally managed single system with minimal maintenance costs Transparency in the recruitment and employee appraisal processes, which hiring, engaging and rewarding performance based on the right competencies and proven performance Real-time reporting for higher management and tracking of set goals and objectives Informed decision-making due to readily available real time reports Centralized control over HR processes, with flexibility for regions to implement localized changes Efficiency improvement for HR functions Cost savings Easy sharing of best practices across the various centers Easy-access, self-service function for employees Facilitated learning for common tasks through document sharing and online tutorials, resulting in time and cost savings Increased employee morale, productivity and engagement

It was not a cakewalk, given the large and distributed scale of ERP system implementation. Spanned over five years (2002-2006) in five planned phases with a clearly set objective, the ERP solution enabled LG to mitigate the challenges posed by vastly spread global centers, for its Human Resource Management System requirements. Today, LG continues to benefit with the automated ERP solution, and continues to enhance it further as needed.

Fuze Energy Drinks Fuze Energy Drinks, going through a rapid growth path, found its existing systems obsolete to meet the growing business needs. Primary challenges were:   

Management of rapidly growing stocks and inventory Planning and managing production matched to demand and supply Reporting needs for financial decision-making

Fuze was looking for a cost-effective, easy-to-maintain solution, without getting into the hassles of computer maintenance. Their ERP vendor (Pyramid Consulting) offered the Sage Acac ERP solution, which was completely web-hosted and was a proven system for the manufacturing industry, with specific modules matching their needs. It offered automation for inventory management, production lines and real-time financial reporting with no on-site maintenance, allowing Fuze to concentrate on its core business, instead of adding overhead for computer system maintenance.

Achieved Benefits The system had a quick and easy setup, with no installation costs. Among the happy results:     

Automation modules for inventory and orders ensured full and timely production reports, including alerts on stock that was “past the expiry date” or “about to expire." Production reporting resulted in full control on product lines, improving demand and supply status. ing entries enabled timely decision-making, based on real-time data. Web-hosted solutions prevented the need to purchase in-house computer hardware. It also ensured easy and timely access to the system from variety of devices. Off-site computer hosting significantly lowered costs, limiting them to annual maintenance charges.

In addition, the contract Fuze signed with Pyramid stipulated vendor engagement and availability for any ad hoc training, as needed.

The Bottom Line ERP systems are usually big-ticket projects with high costs and varying timeframes. Case studies of successful ERP implementations allow for the careful selection of vendors, systems and solutions; a clear understanding of existing gaps and objectives to be met; and sufficient and continuous engagement from the client with the vendor, as

requirements keep changing dynamically over the implementation phase. Simply leaving implementation to the vendor may not be the best idea. Working with the vendor in a partnering role produces the best results.

Because of high degrees of complexity associated with large-scale ERP installations, over time the proportion of successful, versus failed outcomes tend to become fifty-fifty propositions from a business case perspective. Some enterprises are simply ready for ERP, and some aren’t, some are paying attention to what they’re doing, and others aren’t; but either way, any ERP case study is worth understanding what went right, and what didn’t. Consequently, here are four examples of what I’m talking about. ERP case study #1: Cadbury – success

Our first successful ERP implementation case study focuses on Cadbury, a 123 year-old confectioner currently owned by American snack foods conglomerate Modelez International. The company was on an accelerated growth-track while facing problems meeting its production and distribution requirements. Subsequently, SAP was engaged to resolve these concerns. Along with other significant changes triggered by the ERP implementation; multi-node resources-management was extended throughout its supply-chain, along with a complete revamping of existing warehouse, and distribution processes. The consequent impacts afforded Cadbury an opportunity to reduce overall operating costs, while its newly engaged supply-chain, produced significantly better production efficiencies throughout its manufacturing chain. : for an ERP implementation to really pay off, you'll need to see improvements in key areas. A thorough requirements gathering effort during the selection phase is therefore essential

ERP case study #2: Hershey Candies – failure

Not every ERP ends in success, this case study reviews the failure of Hershey, a 147 year-old confectioner, headquartered in Hershey Pennsylvania. The enterprise saw the implementation of an ERP platformas being central to its future growth. Consequently, rather than approaching its business challenge on the basis of an iterative approach, it decided to execute a holistic plan, involving every operating center in the company. Subsequently SAP was engaged to implement a $10 million systems upgrade, however, management problems emerged immediately. The impact of this decision represented complete chaos, where the company was unable to conduct business, because virtually every process, policy, and operating mechanism was in flux simultaneously. The consequent result was the loss of $150 million in revenue, a 19% reduction in share price, and the loss of 12% in international market share. : poor management can scupper implementation, even when you have selected the perfect system. ERP case study #3: - success

As a enormous international candy-maker, Nestle SA headquartered in Konicki Switzerland, had harbored a goal of integrating ERP across all three of its operating companies; Nestle SA, Nestle UK, and Nestle USA. The latter operation had been working toward complete integration of a set of ERP solutions since in the late 90s, but various requirements, organizational, and policy problems had plagued the complete initiation. By the turn of the millennium, its management finally decided that a holistic re-approach to its business requirements were in order. Consequently, this effort paid dividends that allowed SAP to finally get the $200 million job done. Ultimately, positive business impacts included the consolidation of an outdated ing structure, better and more efficient communications throughout its supply-chain, and a much more confident workforce.

: integration across different sites requires a lot of upfront effort - but it pays off in the long run ERP case study #4: PG&E– failure

As a major energy utility San Francisco’s Pacific Gas and Electric should have know better. Its Oracle ERP implementation had gone well, and there had been no problems of note; until it came time to test the system. Apparently, a manager had chosen a live information database to use during pre-launch testing, although no one thought that the regime would uncover any sensitive company information. Unfortunately, this was untrue, and consequently created a host of costly recovery programs, in addition to losing public confidence in the company’s brand. : brief your staff on exactly what they should do and not do. Don't get non-specialist staff to carry out non-specialist roles