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Enterprise Resource

Management

Assignment 2 - Part 1

Submitted by:

Suhrit Biswas
2

Comparative analysis of ERP vendors: SAP, Oracle, and Microsoft

Introduction

ERP system is an integrated information system to support the business within


different organizational parts of an enterprise. The leading global providers are SAP,
Oracle, and Microsoft. ERP packages are designed to be customizable to concrete needs
of an organization and to its legacy systems. The customization of ERP modules for a
concrete user is performed with special tools and using specific or standard
programming languages. Due to already mentioned general ERP characteristics,
customization and implementation usually require specialized knowledge and
significant resources. SAP was founded on April 1, 1972, by five IBM employees. It
developed its first product (financial accounting software) in close cooperation with its
first customer. The company grew initially around ERP and solidified its market
leadership by being a pioneer in the move from mainframe to client-server computing
with its R/3 ERP solution introduced in the 1990s. From there, SAP expanded into a
much broader set of applications for other functions in the enterprise: customer
relationship management (CRM), supply chain management (SCM), product life-cycle
management (PLM), and supplier relationship management (SRM). By bundling and
integrating these applications, SAP became known for high-quality, comprehensive
enterprise solutions, which SAP or SAP-trained SI consultants would then customize.
Oracle was founded in 1977 as Software Development Laboratories. The first Oracle
program was written in assembly language, ran on PDP-11 and with 128k of memory.
The software was never "officially" released though. Version 2 which was released in
1979 was the first to be released. The company had changed its name by then to
Relational Software Inc. Business grew and by 1982 they had changed their name again,
this time to Oracle and in 1987 the company went public. Today, Oracle remains one of
the leaders in the ERP industry. A few of the firsts Oracle brought us are: The first
commercially-available SQL-based database (1979).

The first database to support symmetric multiprocessing (SMP) (1983) The first
distributed database (1986) The first database product tested to comply with the ANSI
SQL standard (1993) The first 64-bit database (1995) The first web database (1997)
The first proprietary RDBMS to become available on Linux (1998) The first database to
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support XML (1999) Microsoft Dynamics AX is a line of business management solutions


that provides financial management, business
intelligence, human resource management, project
management, customer relationship management
(CRM), manufacturing, supply chain management
solutions, collaborative workspace, and
configuration and development. The Information
Technology views quadrants Gartner Consulting
produces each year as a type of benchmark to see
where each provider stacks up against their
competition. In 2007, Gartner released the
quadrant on the left. While many will argue that
Gartner‘s methods are too simplistic and don‘t
give a truly accurate view of what the decision
makers face, it is still a good place to start when
comparing products. Gartner ranks vendors in two
areas, Completeness of Vision and Ability to Execute.

Using various qualifiers based on the rankings, the solutions are placed in one of four
quadrants:

Leaders score higher on both criteria; the ability to execute and completeness of vision.
Typically larger industry developed businesses with vision and potential for expansion.

Challengers score higher the ability to execute and lower on the completeness of vision.
Typically larger, settled businesses with minimal future plans for that industry
Visionaries score lower on the ability to execute and higher on the completeness of
vision. Typically smaller companies that are unloading their planned potential Niche
players score lower on both criteria: the ability to execute and completeness of vision.
Typically market fledgling In 2007, both Oracle and SAP were placed towards the
bottom of the Challengers Quadrant. This would indicate they have the ability to
execute, though maybe not that well as they are towards the bottom of the quadrant,
and they don‘t seem to have a great deal of vision. But is that all there is to look at? In
this study, we focus on functionalities and features, the total cost of ownership, and
target market of the ERP vendors: SAP, Oracle, and Microsoft Dynamics.
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Functionalities:

SAP R/3

SAP R/3 is a client-server based application, utilizing a 3-tiered model, the presentation
layer, the application layer, and the database layer. SAP R/3 is structured using its own
proprietary language called ABAP (Advanced Business Application Programming).
ABAP, or ABAP/4 is a fourth generation language (4GL), geared towards the creation of
simple, yet powerful programs. SAP R/3 also offers a complete development
environment where developers can either modify existing SAP code to modify existing
functionality or develop their own functions, whether reports or complete transactional
systems within the SAP framework. ABAP's main interaction with the database system
is via Open SQL statements. These statements allow a developer to query, update, or
delete information from the database. Advanced topics include GUI development and
advanced integration with other systems. With the introduction of ABAP Objects, ABAP
provides the opportunity to develop applications with object-oriented programming.
SAP ERP redefines enterprise resource planning – delivering role-based access to
crucial data, applications, and analytical tools. With SAP ERP, we can efficiently deal
with business challenges in the following areas:

● End-user service delivery – Ensure that employees can readily access the
critical data, applications, and analytical tools they need to perform all their job
functions efficiently and effectively while also supporting a shared-services
organizational model for human resources, finances, and other key processes.
SAP ERP offers role-based access, self-services, and employee interaction center
support through SAP Manager Self-Service, SAP Employee Self-Service, Duet and
employee interaction center support. Plus, SAP Mobile Time and Travel enables
employees in the field to report time and expenses offline.
● SAP ERP Financials – Ensure compliance and predictability of business
performance – so the organization can gain a deeper financial insight across the
enterprise and tighten control of finances. SAP ERP Financials automates
financial and management accounting and financial supply chain management.
The solution also provides rigorous support for corporate-governance mandates
such as Basel II and Sarbanes-Oxley
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● SAP ERP Human Capital Management – Optimize the HR processes with a


complete, integrated, and global human capital management (HCM) solution.
SAP ERP provides this HCM solution for organizations of all sizes and in all
industries. You can maximize the potential of your workforce, while supporting
innovation, growth, and flexibility. The SAP ERP HCM solution automates talent
management, core HR processes, and workforce deployment – enabling
increased efficiency and better compliance with changing global and local
regulations.
● SAP ERP Operations – Manage end-to-end procurement and logistics business
processes for complete business cycles – from self-service requisitioning to
flexible invoicing and payment – optimizing the flow of materials. SAP ERP
Operations also helps discrete and process manufacturers manage the entire life
cycle of product development and manufacturing. The solution automates the
entire manufacturing process and reduces costs by controlling and adapting the
manufacturing process in real time – and increases customer satisfaction by
delivering higher-quality products.
● SAP ERP Corporate Services – Helps organizations manage their most cost
intensive corporate functions by supporting and streamlining administrative
processes in the areas of real estate; enterprise assets; project portfolios;
corporate travel; environment, health, and safety compliance; quality; and global
trade services. SAP ERP Corporate Services is a complete and integrated solution
that maximizes transparency and control, while reducing financial and
environmental risks and enhancing safety of employees.
● Performance management – Support the entire life cycle of performance
management, delivering real-time, personalized measurements and metrics to
improve business insight and decision making. SAP ERP supports financial
analytics, operations analytics, and workforce analytics, as well as consolidated
financial and statutory reporting; planning, budgeting, and forecasting, strategy
management and scorecards, and risk management.

Oracle

An Oracle database system is a platform with at least one application running on it to


access and process the data. Data is stored logically in the form of table spaces and
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physically in the form of data files. The recommended structure for an Oracle database
is the institute RAC--Real Application Clusters. Multiple instances, usually on different
servers, attach to a central storage array. This offers better performance, scalability and
redundancy for the users. There are various versions of the Oracle database
management software. In addition, Oracle divides it‘s product into various editions to
track marketing and sales.

● Enterprise Edition – The full suite of performance, scalability, security and


reliability stored on either a clustered or single server. Runs on all standards and
available with a large number of applications.
● Standard Edition – Provides Enterprise level functions for mid-sized
organizations. Sold through Oracles 400 Value Added Resellers.
● Standard Edition One – low end—minimum five users—entry level package.

Express Edition – primarily intended for students to learn how to code applications for
Oracle. It is small, free and has limited capacity.

Oracle Personal Edition – ―High end‖ functionality but sold to single-use developers.

Oracle Database Lite – designed to run on mobile devices.

Though this looks like a large number of options, there are really only three true
choices and they are based on the size (number of seats) of the organization. Of the
other three, 2 are for developers and the other just provides access to database
information from a mobile device. Oracle does, however, offer some other ―flavors to
offer as well. Oracle has grown dramatically mostly through acquisitions. Their product
lines include.

● PeopleSoft Enterprise
● Siebel
● JD
● Edwards
● Hyperion
● Agile
● AutoVue
● Fusion
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Not counting the other products (PeopleSoft, JD Edwards etc.) Oracle Business Suites
alone have over 140 different applications which can be installed on their platform.

These include:

● Enterprise Performance Management – A tool which aids in the executive


decision making process by supporting a broad range of strategic, financial and
operational management processes.
● Business Process Outsourcing – an application which seems to work as an
extranet and allows organizations track the non-core business processes which
have been outsourced.
● Customer Relationship Management—tracks what is going on in the sales
department. Allows other departments (finance, production) know what they can
expect. It will also allow the marketing groups to know how effective campaigns
have been.
● Customer Self-Service Solutions—allow customers place orders themselves
without the supplier having to have someone enter the order. This reduces the
risk of order entry errors. Production or warehouse groups receive the order right
away and can act on it much quicker so turn around takes less time.
● Financial Management Solutions—provides and tracks data for finance
operations, governance, risk, compliance, and performance management.
● Human Capital Management – ―tracks all aspects of the Human Capital needs,
from core human resource (HR) transactional functionality through service
automation and delivery to complete enterprise talent management solutions.‖ 1
It provides the needed resources and has proven to reduce the costs.
● Procurement – Insures that the supply chain stays on top of production needs
and maintains the most cost effective method of doing so.
● Project Management—maintains record of current projects statuses and
communicates with those needing the information in order to ensure projects
are proceeding as they should.
● Transportation Suite—ensures shipments reach their destination as well as,
―lowers transportation costs, improves customer service and asset utilization,
and provides flexible, global fulfillment options.
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These are just a handful of the applications available. Essentially, whatever the need,
Oracle has a way to meet it.

Microsoft Dynamics

Microsoft Dynamics AX accounting and finance solutions help you track and analyze
business information. You can easily manage your general ledger, payables, receivables,
inventory, sales process, purchasing, analytical accounting, cash flow, bank
reconciliations, fixed assets, and collections.

● Business Intelligence and Reporting

Microsoft Dynamics allows you to manage budgets, create and consolidate reports and
look for trends and relationships in any part of the business.

● Human Resource Management

Microsoft Dynamics allows the management of applicant and employee information:


payroll and benefits, skills mapping, recruitment and employee registration, and skills
development. In addition the system helps you ensure your organization is meeting
government reporting requirements accurately and on time.

● Project Management

Project management and accounting applications allow project managers, accountants


and executives to improve their project profitability and adapt to changing conditions.
In addition, manage resources, forecast costs and budgets, track time, and expenses.
Lastly, manage contracts and billing.

● Customer Relationship Management

Customer relationship management solutions enable management of customer groups,


create and launch marketing campaigns, track customer activity, manage sales and after
sales. It also enables automation of many day to day tasks for sales, customer service,
field service, call center, and marketing professionals. Manufacturing It provides an
integrated suite of manufacturing applications that give you the tools to plan, manage,
and execute a top of the line manufacturing operation. The manufacturing process
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consists of product configuration, scheduling and shop floor, and supply and capacity
requirements planning.

● Supply Chain Management

This improves inventory management, management of single or multi-site warehouses,


demand planning, order processing, and online collaboration with suppliers.

● Collaborative Workspace

This extends the reach of business applications, information and process to employees,
customers, and partners with role based delivery through a single web-based portal.
Configuration and Development

Cost Comparison

Photo: Software and Service Costs by Vendor


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Successful ERP Implementation

MIE’s ERP Implementation

Mesfin Industrial Engineering (MIE) was founded in 1992 and is a vast unrivalled metal
construction and electromechanical engineering complex in Ethiopia. MIE used over 5
systems before the ERP project was started, many of which were developed by local
vendors and internally by MIE over the last decade. These legacy systems were
expensive to operate and difficult to maintain and develop. They did not provide
accurate, consistent and accessible data that was required for good and timely
decision-making and performance assessment (e.g. delivery performance, quality
metrics). These ageing systems often did not lend themselves fully to a modern
manufacturing environment. The last major manufacturing system to be developed and
implemented by MIE was MERLIN, which stands for mechanized evaluation of
resources, logistics and inventory, the system was basically a scheduling system, and,
although it was capable, it was prone to manual manipulation.

One particular downfall of the system was the lack of communication between
individual sites. Work in progress was often transferred between sites and could not be
tracked accurately; often causing inventory and stock take problems. An additional
system named corporate cost accounting (CCA) was used to financially monitor
transactions, which covered pipeline inventory and intersite transport. MIE also had a
range of individual systems for controlling and monitoring commercial, financial and
procurement functions; these systems had problems interfacing with each other, as
they had different databases and file formats.

The legacy systems did not allow MIE to establish direct, on-line communication with
customers, partners and suppliers. In fact, these systems did not support significant
growth of the business and were not sufficiently agile to keep pace with the changing
business environment. At this point MIE recognized that the adoption of ERP system
was the most significant factor that could enable the company to overcome the
challenges and led to business success. In selecting the ERP vendor, MIE took into
account traditional factors such as financial situations, history, success/failure cases,
and people. Within the project team are specialist internal managers and staff that have
vital knowledge of cross-functional business relationships and experience of the old
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internal systems. In conjunction with this team each operational business unit (OBU)
has its own ERP planning team, which is responsible for implementing, working on
changes and training. MIE’s ERP project team was organized as shown below.

The ERP project consists of a management team of specialists from the external
consulting company Syscorp. Syscorp was chosen because of their substantial
experience within the manufacturing industries.

Syscorp also has the specialized talents of Microsoft Dynamics SL consultants and took
responsibilities of coaching and facilitating the project. The project team from the
Syscorp side was organized as shown in figure 1(b) above. MIE decided to adopt and
utilize the Microsoft Dynamics SL solution offered for project-driven small- and
medium-sized enterprises. There were several problems the implementation project
faced and they are grouped into three areas of cultural, business and technical
difficulties.
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Cultural Problems

The implementation project team expected a high acceptance of the system in areas
that provide just as good or better functionality than the old system. However some
functions and processes might not get the full appreciation the legacy systems once
had. The project team decided to resolve this by illustrating the improvements made to
the company as a whole, thus breaking the traditional segregation of OBUs and
departments. The original implementation plan was increased in an attempt to address
training and cultural changes.

Business Problems

Microsoft Dynamics SL requires a fairly rigid business structure for it in order to work
successfully. The participants of cross-functional workshops soon understood that their
working practices must be adjusted in order to fit Microsoft Dynamics SL, ultimately
changing the way MIE does business. They achieved this by using an internal business
process reengineering (BPR) program. The program consisted of four steps, the first
involved drawing and mapping the current processes. The second step involved
identifying any problems or issues raised from the mapped process. The third step
involved applying some of these issues to a demonstration of Microsoft Dynamics SL, to
identify potential problems within the new system. The fourth step involved the
re-mapping or modification of the processes in line with Microsoft Dynamics SL.

Technical Problems

The main technical problems that MIE has encountered have been with the accuracy of
data. The new system requires the retrieval of old data from the legacy systems that has
to be normalized, screened and stored in a sensible data format within the new systems
data repository. The duplication of data was a major concern that MIE had to address.
In some special areas the old systems were kept running until such time as they could
be phased out by the new systems, and to do this the IT department built interfaces
between the systems. The CAD system used by MIE remained the same, as the process
to alter the file formats would be too expensive and require use of valuable resources
that are needed for the core implementation. MIE has twenty one principal business
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processes, which when taken together describe everything the company does. Figure 2
below depicts the schematic representation of the business processes.

MIE has required over 50 Microsoft Dynamics SL licenses for users across all the
business. The server was provided by Sun Microsystems and in excess of 2 Terabytes of
disk space. The system required almost 15 weekly manufacturing resource planning
(MRP) runs cascaded by plant. A UNIX server bridges the data from legacy systems and
testing and training requires an NT server.

MIE’s ERP Implementation Phases

MIE’s ERP implementation project goes through several phases. The detail
implementation model plan with project time scale is shown below
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Phase 1:- Project Organization and kick off

The first phase of the project was a short intensive study to set the scope of the project
and provide an outline plan and costing. A steering committee was formed to
administer the financial guidance of the project and an ‘ERP Core Team’ was formed to
control and oversee the actual implementation process. Goals have been established
and the implementation plan has been developed at this phase. The deliverables
obtained out of this phase includes system implementation process, project team, roles
& responsibilities of project team, project objectives, project Plan, project scope,
project tracking process and implementation schedule.

Phase 2:- System Definition (Blue Print)

In this phase the scope of MIS’s Microsoft Dynamics SL implementation has been
defined and which leads to the creation of the Business Blueprint. The Business
Blueprint was a detailed documentation of MIE's requirements in WinWord format.
Activities carried out during the second phase of the project included reviewing
information flow, defining external system interface, developing prototype of modules,
and defining new policies & procedures. The expected deliverables of this phase were
specified business process, system interface process, customization requirement, report
requirement, the support of finance and staff work booking, and new policies &
procedures. During phase two the project's core structures were identified. Integrated
program management (IPM) was also adopted for research and development and would
eventually cover the whole business. A significant change was also made from the
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original timing of phase one, the completion of wave one was deferred for about 6
months. This has resulted in a knock-on delay to wave two by a corresponding amount.
The change in schedule was possible without a significant increase in cost because the
problems were addressed early enough in the program.

Phase 3:- Environment Development

This phase was concerned with the physical implementation of the system and its
architecture, and also with changing working practices within the company. It was too
large to implement in one go, and thus was divided internally into two ‘waves’. The first
wave was concerned with the replacement of legacy systems. IPM was also introduced
for new production projects during wave one. The new manufacturing execution
system, known as shop floor data management (SFDM) was also introduced in the same
phase. The ultimate end to wave one was a Microsoft Dynamics SL pilot project at one
of MIE facilities. The pilot laid the foundation for the full ‘go live’ throughout the
company after 9 months. The first wave had the ultimate aim of providing new
capabilities for production order operations. The second wave was approximately 1 year
in duration, and was not operational until the end of the first wave. The second wave
was concerned with implementing requisition, purchasing, inventory, and order
management within the project. By this time the legacy systems were switched to ‘view
only’ as Microsoft Dynamics SL became the executive system. Once the new system
shows a positive response the older systems were phased out. IPM completely covered
the whole business by the end of the second wave.

Phase 4:- Conference Room Pilot

A small-scale pilot of the system was run for 3 months and throughout this period, a
facility known as a production shop became the central focus of attention for the whole
company. This facility was chosen for the pilot run because the facility only produced
100 parts, and material flowed into the facility at low volumes from external suppliers
and internal operational units. The purpose of the pilot was to demonstrate: business
principles, processes, procedures, role definitions and behaviors, and software,
hardware and data transfers. A second pilot was also carried out for nonproduction
purchasing. The second pilot ran executively, covering Derby-based purchasing of
ground support equipment. A third pilot also was run by the requisition section. The
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third pilot was nonexecutive, but designed to specifically explore the interplay between
the legacy system and Microsoft Dynamics SL.

Phase 5:- End User Training

The objectives of this training were to enable users to get a better picture of global
system’s features, to enhance the capability and confidence of users in the running
system, and to enhance the ability of users to relate the system with daily operation.
Accompanying users in their learning curve was found very important to bring users
into the desired level of skill and understanding. The training covered finance modules,
HR modules, distribution modules, manufacturing modules, project modules, service
modules, and system training.

Phase 6:- Go Live Preparation

The final phases of implementation, typically known as “final preparation” and


“go-live,” can be among the most stressful periods of the project. This is where the
proverbial rubber-meets-the road, where months of hard work are put to the ultimate
test—production uses of the software. Final preparation and go-live entail a number of
issues requiring the careful attention of the project team. The main activities
considered in MIE’s ERP project were data live preparation, data reconciliation, and live
database initialization. Production Database is the ultimate deliverable of this phase.

Phase 7:- Go Live to Dynamics SL

As the main ‘Go Live’ of the new system was planned, the most difficult part of the cut
over process was in transferring the data from legacy systems. The sheer volume of data
that has to be transferred is far greater than any normal transaction load that will be
carried out by the system thereafter. In order for this process to be successful the data
must be kept in a ‘stable’ state for a period of roughly 10 weeks. The initial data to be
transferred includes some transaction data and master data, for example, lists of
suppliers. If any changes occur to the data on the old systems after the transfer, they
are logged and then passed through to the new system. The remaining data was loaded
in after the ‘Go Live’. The next step during the ‘Go Live’ process involved running the
MRP system to initialize the whole system. Purchase orders and purchase requisitions
were not transferred from the old system, instead the MRP run should create them
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fresh. The whole ‘Go Live’ process took roughly 2 weeks to complete, and during this
time the new system was ‘off the air’. Immediately after the ‘Go Live’ the existing legacy
systems were switched to view only mode. The view only mode enabled comparisons to
be performed between the old and new systems. However, the legacy systems ceased to
be executive.

Conclusion

This study presents experiences that are obtained from a successful ERP
implementation project in MIE. MIE has understood the business, cultural and
technical difficulties of such a large project, and has developed a solid core
implementation team. The team has used the specialist skills of consultants and the
partnership with the consultant has produced a sound architectural framework for the
project. MIE considered an ERP project risk analysis method and characteristics
analysis method as good tools for risk management. The system will deliver its full
benefit when it becomes at its executive level. The benefits of lower IT cost will be
visible when the system becomes stable and users have had time to adjust to new
working practices. An immediate benefit that will be achieved by the system will be the
ability to promise and then deliver to the customer on time. This was something that
the older systems could never achieve. The ability to deliver on time will improve
customer satisfaction and also improve customer confidence, which should lead to an
increase of orders in the future.

The system will also improve the relationship in the supply chain, as transactions will
be made easier via the use of electronic communications. The future of the project will
eventually lead to the need for a data warehouse. The data is stored centrally and is
extracted from operational, historical and external databases. The database continually
absorbs new data and integrates it with the previous data. As a conclusion, studies
towards reporting successful ERP implementation projects should be encouraged. It is
the best way to share successful experiences among companies of similar nature. Issues
of post implementation period should also be taken into consideration such that
strategic needs and requirements for sustaining the effectiveness of such enterprise
information systems after a period of relative stability following initial implementation
will be clearly understood.
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Unsuccessful ERP implementation case study

Nike’s ERP implementation:

Nike, Inc. is an American multinational association that is involved in the design,


development, manufacturing and worldwide marketing and sales of apparel, footwear,
accessories, equipment and services.

The company’s world headquarters are situated near Beaverton, Oregon, in the Portland
metropolitan area (USA). It is a major producer of sports equipment and one of the
world’s largest suppliers of athletic shoes and apparel.

It employs more than 44,000 people worldwide and in 2014 the brand alone was valued
as $19 billion (€17,5 billion), making it the most valuable brand between sports
businesses. Founded by Bill Bowerman and Phil Knight on January 25 1964.

Nike sponsors many high-profile athletes and sports teams around the world, with the
highly recognized trademarks of "Just Do It" and the Swoosh(tick) logo.

Situation:

ERP systems fully fledged rise in the 1990s. owing to the year 2000 drawback and
therefore the introduction of the euro that discontinuous legacy systems, several
corporations took the chance to replace their previous systems with ERP. "ERP II" was
coined in 2000 in an editorial by Gartner Publications entitled ERP Is Dead—Long Live
ERP II. It describes a web–based software system that provides real–time access to ERP
systems to workers and partners (such as suppliers and customers). The ERP II role
expands traditional ERP resource optimisation and transaction processing. instead of
simply managing shopping for, selling, etc.—ERP II leverages buying within the
resources information its management to assist the enterprise collaborate with
alternative enterprises.

In the year 2000, however Nike took the decision of implementing a unique
management of supply chain with the ability to forecast demand in the market so that
the company can quickly meet these requirements. This was also the time when the
organization also was in the SAP ERP system implementation process but the company
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found that the forecasted demand was not adequate to the requirements at that
particular situation.

This made the company to acquire a software named as I2 in order to -

● Enable the organization to respond quickly in case of changes in the shoe


market.
● Scheduling of planned productions with updated requirements
● Start to produce new products within a week instead of waiting for a long time as
previous times.

However, if successful then this strategy could have been a very helpful one for Nike and
the company would have been easily able to decrease the unwanted products from
being produced, decreased inventory system and increased the shoe styles production
raising the required demand.

Problem:

The particular demand planning software instance is known as the software of I2 which
was one of the most crucial factors for the company's failure. The company of Nike
failed to evaluate properly in the way in which this new software of planning demand
will be integrated within Nike’s system. The company rushed in implementing the
software before the main package of SAP which was not ready to be deployed causing
the system failure of I2 within Nike's SCM.

Without a doubt, Nike had a unique process of supply chain which required the stores
to make merchandising pre-orders in advance for 6 months. The problem in this
process was the fact that the company did not know whether the ordered items in Nike’s
store will be fashionable or not at the time of the delivery which is nearly after 9
months. Nike’s fashion designers and the planners of demand did not acutely interpret
the way in which order with such a high leading time should be placed and the company
totally depended on the brand name of Nike for selling its new products. In the shoe
market products with short order shipment time have high demand from the stores and
this forced Nike to be under competitive pressure for getting their system of supply to
perform in the next 6 months. The challenge of not being able to get the SCM in
position led towards opening the company to lose out on the share in the market
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especially because of the fierce market competency. Therefore, when the I2 system was
implemented at Nike and the system could not handle the 9 month production cycle,
the company began to lose out and the forecasted information also completely was
thrown off resulting in making the supply chain to cost the company 100 million dollars
from damages directly. The company also had to face brand image problems, lawsuits
being filed on its name and other speculative investigations further lowering the
reputation of the company.

The software of I2 was actually made to help Nike in matching the demand and supply
by mapping the specific products to be manufactured. The software needed to be linked
with several ERP systems and back end processes. This project also was a replacement
from the previous Manugistics implementation. The responsibility of the new project
was to reduce the rubber needed, canvas needed and other sports requirements to be
fulfilled by Nike but it failed.

Losses

Trouble began soon after the live launch, when a software system bug resulted in
skewed industrial plant orders. Nike ended up flooding the market with low-performing
Air Garnett sneakers, while leaving sellers short thousands of pairs of in-demand
Jordan models. The company took substantial losses as a result, acquiring $100 million
in lost sales and suffering a stock value drop of twenty 20. The loss in sales, also as class
action lawsuits, were because its system was unable to deliver its new Air Jordans and
Air Garnett to acceptable distributors.Nike placed the blame squarely on i2
Technologies, contending that the company's imperfect software was the foundation
reason for the supply chain breakdown. On top of that, the garments company claimed
the software system supplier may have simply addressed the problems that resulted in
sluggish integration and unsuccessful ordering operations. However, those on the
outside looking in believed

Nike shared some of the responsibility. The i2 Technologies solution accounted for just
ten percent of a $400 million supply chain overhaul that appeared excessively ambitious
from the beginning, according to CNET. the company needed to consolidate a consumer
relationship management system, an ERP and supply chain tools into one functioning
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system, cio reported. This is a tall order for any technology firm, as an incalculable
range of variables should line up for things to go off without a hitch.

Conclusion

From the angle of analyzing the case of Nike, it was evident that the exploration of
implementing ERP done by organizations needs to consider the important factors of
success and then recommendations should be provided to maintain success with the
implementation of ERP. These key success drivers are general regions which most of the
projects of implementation based on ERP need to accomplish.

It was not a complete failure, after the debacle, Nike realized that the supply chain
management implementation using the ERP system software cannot and should not be
lightly considered. I2 was a very small system but the company should have taken all
risks into consideration. Nike decided that it should implement the solution of SAP AFS
as a variant of software named as SAP R/3 particularly for the industry of apparel and
footwear. With the strategy of single instance within the conformity, the SAP AFS
application was used by Nike throughout geographic locations and also made choices of
implementing various applications of SAP inclusive of management of the supply chain
along with warehouse of data in business.
22

References

● https://docplayer.net/14346632-4-comparative-study-of-existing-erp-vendors-4
-1-introduction.html
● https://www.intechopen.com/chapters/69320
● https://www.investopedia.com/terms/e/erp.asp
● https://www.softwaresuggest.com/erp-software

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