Challenges and Successes of ERP Systems

This assignment delves into the complex world of Enterprise Resource Planning (ERP) system implementations. It requires a critical analysis of the various challenges and successes encountered during this process. Students are tasked with exploring key aspects such as risk management strategies, contrasting user and provider perspectives on adoption, and the impact of ERP systems on existing business processes. The assignment encourages a deep understanding of the multifaceted nature of ERP implementation and its implications for organizations.

STRATEGIC MANAGEMENT AT WHIRLPOOL
STRATEGIC INFORMATION SYSTEM
STUDENT NAME
NAME OF THE INSTITUTE

STRATEGIC MANAGEMENT AT WHIRLPOOL
Executive Summary
This is the age of globalization and digitalization. Globalization is adding new complexity in
managing the business processes and appropriate IT systems that can support the Global
businesses are the need of the hour. Traditional IT systems and Legacy systems are not enough
for the current business climate and in the era of Business analytics, Internet of things, cloud
computing and many other new technologies.
This case study is about analyzing the business processes of the Whirlpool Corporation, an
American manufacturer major, and also the various AIS and ERP systems available in the
market like Oracle, SAP, Microsoft dynamics, MYOB, Xero and proposes an appropriate
product that is aligned to the business processes of the organization. This document can be
treated like feasibility study that every organization conducts before finalizing their ERP vendor.
Considering the global business operations and the requirements, Oracle Fusion ERP systems
are proposed for the organization. The purpose of this case study is to explain the various steps in
detailed manner required to arrive at this recommendation of selecting Oracle Fusion ERP
systems.
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Contents
1. Introduction...............................................................................................................................4
2. Analysis....................................................................................................................................5
3.1 Define business processes of Whirlpool.............................................................................5
3.2 Generating appropriate business requirements for Whirlpool............................................7
3.3 Determining the systems requirements...............................................................................8
3.4 Software selection...............................................................................................................8
3.5 Three ways in which Whirlpool can utilize such technologies to improve business
efficiency...................................................................................................................................10
3.6 Level of efficiency of the technology implementation.....................................................10
3.7 Security risks....................................................................................................................11
3.8 How to mitigate security risks..........................................................................................11
3. Conclusion..............................................................................................................................12
List of references...........................................................................................................................14
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1. Introduction
This is the age of massive competition. Due to increased competition, government
regulations and many other developments like Globalization, business climate is getting
complex. Most of the organizations want not only to reduce their IT spending but also to focus
on their core competencies. ERP systems help the organization to streamline and optimize their
business operations as a result of which organization can focus more on its core competencies.
Whirlpool, an American Home appliance manufacturer, is selected for the purpose of this
assignment. Its revenue is more than 20 billion US dollar and it is having 10 manufacturing
centers, 50 research centers and numerous sales offices. It is a household name worldwide
however it is using legacy systems, which are not capable of handling the scale of operations.
Company is evaluating to migrate their IT systems from traditional systems to modern IT
systems to reduce the cost of their operations and become more efficient. There is no dearth of
organizations that have suffered heavy losses while implementing ERP systems. There are even
incidents of going bankrupt of FoxMeyer drug while implementing ERP systems. These list of
failures shows that it is very important to carry out the proper feasibility study before finalizing
the ERP product.
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2. Analysis
Whirlpool has presence in more than 170 countries and sells its product under various brand
names like Jenn-Air, Maytag, Amana, Bauknecht to name a few. As its operations are spread
worldwide, it has to deal with numerous suppliers and distributors on a daily basis and it is very
important that company should have to the date IT systems to carry out its operations effectively.
3.1 Define business processes of Whirlpool
Whirlpool is using both make to stock and make to order strategy. Some of its standard
products with standard specifications are make to stock based on the demand forecasting and
customer orders are replenished from the existing inventory while some of its products that are
based on the bulk orders for some particular customer with particular specifications are made to
order once the order is received. Some of its key business processes are as follows:
 Order to cash cycle where it receives orders from distributors and book them. Once
orders are booked in the system at sales office, they are transferred to the warehouses
where they are picked and stored near the dock. Based on a delivery schedule, order will
be dispatched and shipped to the customers. Once the customer receives the order and
confirm delivery, invoice will be prepared and sent to them. Once the payment has been
received, the sales order is closed (Black, & Kohser, 2017).
 Creating and completing discrete and lot based job: Once the work orders are released
by the advanced supply and planning system, they are scheduled. Based on the schedule,
material is issued from the stores for the work orders that are due to complete that day.
Once the various operations based on the routings are completed, jobs are completed and
on hand inventory is increased (Dumas & Rosa, 2013).
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 Inventory Counting Process: Whirlpool maintains an inventory of hundreds of raw
materials to manufacture its wide range of products. Inventory accuracy is very important
for the organization to ensure that the inventory in the warehouses matches with the
quantity in the system (Black, & Kohser, 2017). Whirlpool conducts periodic inventory
counting process and corrects the errors in the system.
 Quality Inspection Process: Whirlpool provides high quality to their customers. To
ensure quality, it has various checks in place. Whenever material is received against the
purchase order, the quality team inspects it before it is accepted. Also, while
manufacturing, quality is checked during the key operations especially before the
bottleneck operations to ensure that right material will be processed by the bottleneck
operation.
 MRP system: This is material planning system in which based on the demand forecasts;
system will generate recommendations for requisitions for appropriate items. Once
requisitions are generated, they should also be released at the right time so that they will
reach only when they are required and not before that as there is not much space in the
warehouse.
 Sourcing cycle: As there are numerous raw materials required, whirlpool deals with
number of suppliers. While some of the items are purchased on a regular basis, some are
one time products. For regular items, Whirlpool has dedicated list of approved suppliers
with whom it places purchase order as part of blanket agreement. For 1 time purchase, it
releases request for quotations and based on the quotations, it organized reverse auction
processes among the suppliers. Once the supplier is shortlisted, contract is signed and
purchase order is raised. After receiving the material, it pays to the suppliers.
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 Prototyping/Engineering: As the company focuses on a continuous research and
providing the better products to its customers, prototyping is an important function in the
company.
3.2 Generating appropriate business requirements for Whirlpool
Below is the list of requirements based on the business processes:
 ERP systems should have system to generate requisitions, purchase orders, capturing the
list of suppliers
 ERP systems must have capability to maintain BOM (Bills of materials) and routings and
also to maintain the lead time of the various items
 ERP system should also have dashboard where various Key performance indicators are
measured
 It should have ability to book sales order into system and provide appropriate promising
date to the customers
 It should have support for quality systems
 It should have capability for Material production schedule and material requirement plans
to drive requirements on a daily basis
 It should have capability to forecasts the future demands based on the sales order history.
 It should have engineering module where if Bills of material is defined, it should not be
available for manufacturing department because it is just an engineering bill not approved
for manufacturing (Johansson & Carlsson, 2013)
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3.3 Determining the systems requirements
There are lots of system requirements. Product should be scalable i.e. it is easy to rollout the
ERP products for new sites. Also, it should have standard flexibility for all the business
processes without having any customization (Wu et al., 2015). Not only this, it should support
the structure of maintaining various legal entities so that it is easy to maintain financial
information based on the region. It should be secure and user friendly. Also, one of the important
things is localization. There are different countries that have their own rules of doing business
and have different business processes (Chang, 2016). It is very important that ERP systems
should have their localized product for different nations specially China and Brazil where there
are quite a number of regulatory actions are needed unlike most of the countries. Also, ERP
should have their product on the cloud and the data migration from legacy to cloud systems
should also be easy.
3.4 Software selection
Some of the popular systems are as follows:
Oracle fusion ERP systems: Oracle is one of the top 2 market leaders in the ERP systems. It
has various modules like Purchase order, Sales order, Account payables, Bills of materials,
Costing, Manufacturing, Advanced planning systems and pretty much fulfill the system and
business requirements of the Whirlpool. Also, it is used by the world leaders like 3M, General
electric, Philips, Boeing and thus has very impressive credentials. While earlier they have on
premise system, they have recently come up with the cloud version of their product, which is
getting a very good response from the customers (Mancini & Vaassen, 2013).
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SAP Systems: SAP is the market leader in the ERP systems. Like oracle, it also fulfills most of
the requirements for Whirlpool and also has numerous modules like supply chain,
manufacturing, order management, financials, customer relationship management, Projects and
so on. World leaders like Schneider, Volkswagen, have also implemented it. With the advent of
cloud computing, it also has recently launched its cloud products with pay per use model billing.
However, SAP is quite expensive. Also, SAP is very strong in financial modules as compared to
manufacturing modules (Singh, 2013). Due to the nature of the business at Whirlpool, it is
looking for vendors that have strong capability in manufacturing and supply chain operations.
MYOB systems: MYOB is the leader in accounting systems in Australia and also launched a
product in cloud but they are lacking in supply chain systems. There is no support for perpetual
inventory, inventory planning systems and limited support for manufacturing. This product is
incomplete and if whirlpool uses this product, the probability that another product is needed is
very high which will eventually increase the cost of building integrations between the systems
and maintaining the same (Dillard & Yuthas, 2013).
Microsoft dynamics: This product is also very famous but it has limited capability on the
forecasting and quality modules. Also, Most of the big organizations like Whirlpool are using
SAP or oracle systems. Microsoft ERP is used by the small and medium scale enterprises.
Based on the above analysis, Oracle ERP systems are recommended to Whirlpool as they are
quite strong in manufacturing modules and fulfill all the business and systems requirements of
the company. They also have a localization products rolled out for china and Brazil (Brown, Xu,
& Stevenson, 2015).
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3.5 Three ways in which Whirlpool can utilize such technologies to improve business
efficiency
 With forecasting and master production schedule, organization can do its Sales and
operation planning more effectively taking capacity and financial constraints into the
account because all the modules works in an integrated manner in ERP.
 As the business processes are integrated, it helps the company to enter the data again and
again by different department and thus helps in reducing redundancy. For example,
Purchasing used to record the items, quantities and suppliers and account payables
department also used to record the same details which results in redundancy. ERPs
architectures are based on the flow of the data. Once the purchase order is raised, data
will be automatically available to Finance/account payables department and they no need
to maintain separate data (Parr Shanks, & Darke, 2013).
 With inventory accounting, customer can promise the dates to their customers more
effectively and increase order fulfillment rate.
 Material requirement planning helps the organization to maintain the optimal inventory
and thus results in savings
 With proper Bills of materials data, only the items that are needed to build the product
will be issues once the job is released and thus avoids incidents of miscommunication or
wrong item issued
3.6 Level of efficiency of the technology implementation
Once the ERP vendor is finalized, next step is to shortlist an implementation partner. Each ERP
vendor has their list of certified partners. Once Whirlpool has list of certified partners, it can
invite proposals from all of them and can consider their costs, timeline and other paratemeters
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before finalizing an implementation partner. There are organizations like Deloitte, Ernst &
Young, IBM, Accenture that have huge experience in implementing oracle applications for big
clients like Whirlpool. Selection of right implementation partner is the key to successful
implementation. When the FoxMeyer implementation failed, organization blamed its consulting
partner Anderson for the failure while Anderson passed the blame on to the SAP and SAP ERP
does not have the capability and FoxMeyer has chosen the wrong product for their business
processes (Conteh, & Akhtar, 2015).
3.7 Security risks
Data privacy and confidentiality are one of the major issues associated with the cloud
computing projects. There is a risk of data leakage as the clouds systems are quite susceptible to
the attacks. Also, ERPs systems contain confidential data like details of the customers, suppliers,
employees and any leakage can badly impact the reputation of the company. There have been
cases that employee who is not a buyer is able to access the Purchase order data and so on. In
short, there is no functional security built in the product (Dutta, Peng, & Choudhary, 2013). All
data should have authorized access.
There are various rules in different countries about the way data is handled in Cloud.
Whirlpool must ensure that cloud vendor should abide by all local rules and will be responsible
in case of any penalty (Considine & Parkes, 2012).
3.8 How to mitigate security risks
As far as the Oracle ERP systems are concerned, they have all the features like access based
on the role, workflows based approvals. Most of the risks are coming from the cloud part of it.
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Whirlpool can consider having a private cloud although it will be costlier but it can be much
more secure and there is no instance of data mixing.
Whirlpool should also ensure that Oracle ERP vendor is maintaining the backup copies of the
server, which can be used in case of any emergency. Also, Whirlpool should openly talk about
points like business continuity plan, disaster recovery plan, and responsibility of abiding local
cloud computing laws and so on. Best way to mitigate a risk is to clearly define the owner of the
every task and activity and to make the contract as much air tight as possible (Baskerville &
Wood-Harper, 2016).
To avoid the risk of malwares, company must ensure that all the anti-viruses and operating
systems are updated as soon as the fix is released (Brender, & Markov, 2013). In the recent
attack of Wannacry ransomware worldwide, Microsoft has already released a fix before 2
months. NHS hospital, which is major victim of this attack, has not updated its systems and thus
become the victim. The best part of the cloud adoption is that updating is not the responsibility of
Whirlpool but of the Cloud service provider however Whirlpool has to ensure that Cloud service
provider is doing its part correctly on a timely basis.
3. Conclusion
This report discusses the various steps that will help the Whirlpool to make an informed
decision about their investment in IT systems. Whirlpool is the Home appliance manufactures
that have its offices worldwide. Currently, it is using legacy systems but with the advent of
globalization and massive expansion in last few years, legacy systems are not capable of
supporting its scale of operations. And thus Whirlpool is exploring the choice to switch to new
IT systems that can streamline and optimize its business operations and helps the organization to
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save the costs. Keeping this in mind, it started off with discussing various key business processes
in the organization and analyzing its business and systems requirements. After that, various ERP
products are analyzed and the closest one, which is closely aligned with the Whirlpool business
processes, is recommended so that there is no need to build any customizations. Oracle ERP has
been found to be more suitable for Whirlpool and it has been recommended and the various steps
to arrive at the recommendation are also been discussed.
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