LM504 Logistics Practice: SAP, Implementation & Order System

This report provides a detailed logistics analysis, focusing on SAP's key technological features that differentiate it from conventional business software, its impact on the implementation process across various modules like human resources and finance, and the development of a customer order system for Shanghai Volkswagen's Tiguan SUV. It explores the information needed from customers, the data provided to them, and the internal use of this information within the company, while also addressing potential problems in implementing the system. Furthermore, the report analyzes historical demand data for Gree Electronics' air conditioners across five regional warehouses, examining correlations and potential implications for supply chain management. The analysis covers both the strategic advantages and potential challenges of decentralized strategic implementation using SAP, emphasizing the importance of departmental autonomy, resource optimization, and communication while mitigating risks such as objective dilution and timing inconsistencies. The report concludes by highlighting the benefits of online ordering systems, including reduced human error and cost minimization.

Running head: LOGISTICS ANALYSIS
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Logistics Analysis Paper
Student's Name
Professor's Name
Affiliation
Date

LOGISTICS ANALYSIS
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Logistics Analysis
Question 1
SAP represents Systems, Applications, and Products in Data Processing. In the current
digital age, software like SAP are providing businesses with various technologies that they can
use to growth, diversify, and simplify everyday operations. It is important for businesses to
familiarize themselves with emerging technologies as a way of securing marketplace relevance,
brand reputation, and consumer loyalty. SAP bridges the disconnect between companies and new
business technology by providing integrated business solutions that are tailored to different
departmental needs with an organization. There are five technological advantages of SAP that
transcend conventional accounting/planning/control software these are: digital business; Internet
of Things (IoT); machine learning; enterprise mobility; and SMEs growth accelerators. SAP
introduced digital business technology with the aim of restructuring tradition business models
through the introduction of intra-firm data sharing technology that limits the workload imposed
on employees (Gruber, Buerkle, & Duncan, 2016).
According, to SAP, Internet of Things is viewed as a means of connecting office
computers with each other, and computers to people irrespective of the business or industry of
operation. Machine learning is viewed as form of Artificial Intelligence (AI) that allows SAP
software to better the user interface by making the work easier through recollection and
forecasting of behavior. This "thinking ability" allows the software to provide suggestions and
guidelines that will match the user's expectations. SAP provides ingenious ways through which
management can communicate with employees, consumers, and stakeholders through enterprise
mobility technology that allows for sharing of vital information through secure channels and

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encrypted formats. Lastly, SAP software provides strategy formulation and benchmarking
technology that allows SMEs to growth in markets that dominated by large organizations and
conglomerates (Gruber, Buerkle, & Duncan, 2016).
Question 2
According to a management research project conducted in 2018, less than 30% of all
strategic plans developed by organizations are actually implemented. The implementation
process is a vital part of strategic planning that is considerably difficult to perform successful. As
such, SAP has lightened the load by ensuring that different departments are able to implement
their strategies separately. By so doing, the organization is able to optimize resource utility by
mitigating time wastage as management tries to coordinate all departments to towards the
implementation of a single strategic plan of action. Moreover, separate implementation ensures
that departments are able to create realistic time-frames within which the expected goals will be
realized. Furthermore, SAP ensures the preservation of autonomy between the different
departments by ensuring the strategic goals of one department are not overlooked (Elder, 2009).
The separation also allows for the easy mobilization of stakeholders due to similarity of
interests when dealing with individuals from the same department as opposed to formulating a
single strategic plan to direct the entire organization. The relationship between management and
employees is improved if the two groups are allowed to work together in departmental units.
Therefore, consensus and commitment are important factors in the implementation process. It is
easier for workers to buy into a plan if it tailored to meet their specific workplace needs and not
the general wants of all employees. The apportionment of resources toward the implementation
process is better done with regard to departments since the needs of one department may exceed

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those of another. Hence, departmental manipulation of resources is more than likely to improve
or better the implementation process. At the departmental level, management is able to clearly
identify the number of individuals and amount of money required for their proposed strategic
plan to be completed (Smith, et al., 2014).
On the other hand, there are several issues commonly associated with decentralized
strategic implementation (where departments are allowed to implement their own strategies) that
complicate the business performance of a given organization. For instance, this form of
separation can result in the dilution of business objective and goals in favor of departmental
milestone. A department that is performing below expectation can set objectives that are easy to
achieve instead of focusing of organizational targets and production requirements. In other
situations, a department many have too few employees limiting the ability of the department to
implement strategies without necessitating the help of senior management or other departmental
heads. Timing also becomes an issue because departments will set different implementation time
frames thereby eliminating any form of uniformity in the implementation process. Moreover,
considerable separation does limit communication between departments making the
implementation process difficult for senior management to coordinate and direct towards the
actualization of specific business strategy that will govern company success (Radomska, 2015).
Implementation culture within the organization can be eroded by the separation created
by SAP making the process more difficult instead of streamlining and bettering it. This erosion
can be witness in the loss of focus, adherence to company vision, and commitment of
stakeholders to process completion. Nevertheless, the benefits of using SAP in this manner
considerably outweigh the short-coming. SAP allows for the finalization of the strategic plan
after successful collection from all concern parties. SAP will allow departments to properly

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budget the implementation of different goals based on financial assessment results and
predictions. The software allows management to produce the different versions of the strategic
plan to be implemented for each department. In addition, SAP generates "scorecards" that track
and monitor the implementation process for the different departments. The separation of
departments during the implementation process does not limit the roll out of the intended
business strategy throughout the entire organization. In fact, SAP does in a way allow for the
modeling of departmental annual plans around corporate plans. The express communication
provided by SAP enables monthly strategic meeting that are focused towards the reporting and
monitoring of the implementation process. Lastly, SAP does provide for the collective review of
the implementation process at department level making it possible for correction and adjustments
to be made before the matter is finalized (CDRG, 2014).
Question 3
Part a)
Personal Information
It is important to get the customer's personal information for the purpose of data
collection. The personal information should relate to the customer's: name; phone number; email;
address; job title; age; payment method; personal identification; and sex. The name of the
customer is important to have because it will used to indicate on the necessary documents the
name of person placing the card order. The phone number and email address are necessary for
the sake of contacting the customer when the order has been processed and fulfilled. The
customer's address is taken to aid with assessment of shipment costs and options available to the
buyer. Getting the customer's job title and place of employment helps one to understand the

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financial capability of the person with regards to procuring the vehicle. Moreover, it provides
information on the social class that is most likely to order a Volkswagen Tiguan SUV. Age and
sex provide data on the age group and gender that is most likely to procure this specific make of
the Volkswagen SUV. Payment method and personal identification will be used to illustrate the
customers preferred mode of procurement and identification (O’Donnell, 2010).
Car Preference and History
The customer can provide information relating to his current car model and preferred car
model. For instance, a customer could have a higher preference for saloon cars but because of
lack of knowledge on them, he/she decided to procure a car similar to one he/she current drives.
This information helps with advising the customer on the optimal car choice that will fully meet
their day to day needs. If it is the customer's first time trying a Volkswagen car, it would be
good for them to get insight on different models that would easily satisfy his/her transportation
needs e.g. a family SUV or a cargo Lorry (Deloitte, 2014).
Referral Avenue and Customer Feedback
A good business needs to engage with its customers to ensure that their products are
positively received in the market, and brand awareness is considerably good across the world. If
the customer was indeed referred to buy the Volkswagen Tiguan SUV, it is important to know by
whom or via which media for the purpose of assessing the efficacy of different marketing
platforms and techniques. For instance, the person may have been referred to Volkswagen cars
by a television advertisement. Lastly, it is good to gain insight from the customers on aspects of
the ordering process that they liked, dislike and possible improvements that can be made to better
the procedure (Mindy & Wood, 2008).

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Part b)
Car information and Order Number
It is important for the client to be provided with car details that related to engine number,
and car specification as a precaution to ensure that the car is not replaced or ransacked during
shipment. Moreover, the customer needs to know the order number for the purpose of tracking
the SUV during shipment and clearing upon its arrival. In addition, shipment information should
also be provided to the customer. It is important for the client to know the shipment date,
method, and personnel. This knowledge will better the vehicle tracking process while it's on
transit from the distribution center to the customer's preferred pick up place or residence
(O’Donnell, 2010).
Part d)
The gathered information will be used to fuel business improvements and restructuring.
For instance, demographic data (age, sex, and race) will be used to develop marketing strategies
that will allow Shanghai Volkswagen to appeal to car buyers of a given niche while providing
opportunity to develop solutions to reach more buyer groups; for instance, middle-aged women.
Customer contact information is used to send promotional offers and payment invoices/receipts
to buyer; in most situations, the contact information is used to make follow ups with customers
with regard to previous inquiries on a given car model. Knowledge of customers' payment
methods allows the organization to understand which money transaction avenue is the most
popular with consumers. Referral information simply lets Shanghai Volkswagen understand
which advertisement and brand awareness platforms are working properly; allowing for a

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significant proportion of marketing funds to be directed to those avenues (Mindy & Wood,
2008).
Part d)
The issues that would require solving before the ordering system is implemented are:
customer communication avenues; order management system; and personnel training. The
company needs to develop methods through which the organization will be able to reach and
communicate with customer for them to place their order. Applicable avenues would have to a
website page to handle orders, a toll free call center, and lastly a mobile device application that
will allow customer to make orders using their smartphones. Shanghai Volkswagen then needs to
develop an order management system/database that will provide secure access, retrieval, and
storage of order data to authorized individuals. Lastly, a team of people need to be trained on
how they with relate with customers, handle orders, and maintain the order management
database (Elder, 2009).
Part e)
The online applicability of the ordering system allows for the omission of human errors
on the company's part limiting any legal issues relating to wrongful order placement as a result
of coercion, misdirection, or duress. Moreover, Shanghai Volkswagen will be able to minimize
costs in future because a considerable portion of order placement will be handled by automated
systems instead of sales personnel. In addition, the website ordering system is becoming a
popular technique and is expected to be the most widely used avenue in future. As such, the
company will guarantee its ability to adapt to customer preferences in future (Smith, et al.,
2014).

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Question 4
Part a)
1 2 3 4 5 6 7 8 9 10 11 12
0
20
40
60
80
100
Historical Data of Demand
Chongqing
Hefei
Zhengzhou
Wuhan
Shijiazhuang
week
Demand
Chongqing Hefei Zhengzhou Wuhan Shijiazhuang
Chongqing 1
Hefei -0.14884 1
Zhengzhou -0.33689 0.277353 1
Wuhan 0.052992 0.36021 0.179845 1
Shijiazhuang -0.08942 0.374515 0.092477 0.235277 1

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1 2 3 4 5 6 7 8 9 10 11 12
0
50
100
150
200
250
300
350
Single Warehouse
Single Warehouse
Week
Demand
From the bar graph and correlation table above we can confirm that increment in demand in one
region within a given week does also translate into increased demand in another region for the
most part. The correlation between most of the warehouses is positive supporting the assumption
made above. Therefore, making a centralized distribution center is not a good idea because it will
have to process the demands of all five regions of china. Moreover, shipment duration will
increase in some regions from 2 weeks to highs of up to 4-5 weeks. The centralized warehouse
will save costs on storage and staff but will create sizable expenses in the logistics department.
Part b)
Cost Chongqing Hefei Zhengzhou Wuhan Shijiazhuan
g
Total
Not
centralized

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ordering
cost
¥2,641,800.
00
¥2,719,500.
00
¥3,146,850.
00
¥3,202,350.
00
¥3,058,050.
00
¥14,768,55
0.00
holding
inventory
cost
¥595.00 ¥612.50 ¥708.75 ¥721.25 ¥688.75 ¥3,326.25
shipment to
warehouse
¥5,712.00 ¥5,635.00 ¥6,237.00 ¥5,193.00 ¥3,857.00 ¥26,634.00
shipment to
market
¥6,188.00 ¥6,370.00 ¥7,371.00 ¥7,501.00 ¥7,163.00 ¥34,593.00
Total cost ¥2,654,295.
00
¥2,732,117.
50
¥3,161,166.
75
¥3,215,765.
25
¥3,069,758.
75
¥14,833,10
3.25
Centralized
ordering
cost
¥14,768,55
0.00
¥14,768,55
0.00
¥14,768,55
0.00
¥14,768,55
0.00
¥14,768,55
0.00
holding
inventory
cost
¥3,326.25 ¥3,326.25 ¥3,326.25 ¥3,326.25 ¥3,326.25
shipment to
warehouse
¥31,932.00 ¥30,601.50 ¥29,271.00 ¥23,949.00 ¥18,627.00
shipment to
market
¥14,789.00 ¥14,769.00 ¥12,323.00 ¥16,221.00 ¥18,154.00
Total cost ¥14,818,59
7.25
¥14,817,24
6.75
¥14,813,47
0.25
¥14,812,04
6.25
¥14,808,65
7.25

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The best system to use would have to be the single central warehouse because it will have less
cost compared to the current system which records cost of RMB14,833,103.25; therefore, the
optimal centralized warehouse to use would have to be Shijiazhuang which has the least cost
with RMB14,808,658.25.
Part c)
Based on the table below, I would still recommend the centralized system because it increases
efficiency but it is still cheaper especially with regard to optimal choose central distribution
warehouse Shijiazhuang which has the least cost with RMB14,827,284.25. This centralized
system increases efficiency considerably by reducing the delivery duration by four days.
Cost Chongqin
g
Hefei Zhengzhou Wuhan Shijiazhuang Total
Not
centralized
ordering cost ¥2,641,80
0.00
¥2,719,50
0.00
¥3,146,850
.00
¥3,202,35
0.00
¥3,058,050.0
0
¥14,768,55
0.00
holding
inventory cost
¥595.00 ¥612.50 ¥708.75 ¥721.25 ¥688.75 ¥3,326.25
shipment to
warehouse
¥8,568.00 ¥11,270.0
0
¥12,474.00 ¥10,386.0
0
¥7,714.00 ¥50,412.00
shipment to ¥6,188.00 ¥6,370.00 ¥7,371.00 ¥7,501.00 ¥7,163.00 ¥34,593.00

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market
Total cost ¥2,657,15
1.00
¥2,737,75
2.50
¥3,167,403
.75
¥3,220,95
8.25
¥3,073,615.7
5
¥14,856,88
1.25
Centralized
ordering cost ¥14,768,5
50.00
¥14,768,5
50.00
¥14,768,55
0.00
¥14,768,5
50.00
¥14,768,550.
00
holding
inventory cost
¥3,326.25 ¥3,326.25 ¥3,326.25 ¥3,326.25 ¥3,326.25
shipment to
warehouse
¥47,898.0
0
¥61,203.0
0
¥58,542.00 ¥47,898.0
0
¥37,254.00
shipment to
market
¥14,789.0
0
¥14,769.0
0
¥12,323.00 ¥16,221.0
0
¥18,154.00
Total cost ¥14,834,5
63.25
¥14,847,8
48.25
¥14,842,74
1.25
¥14,835,9
95.25
¥14,827,284.
25

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References
CDRG. (2014). Implementation Barriers. Capacity Development , 1-6.
Deloitte. (2014). Driving through the consumer’s mind: Steps in the buying process. Deloitte , 1-
24.
Elder, S. (2009). Basic concepts, roles and Implementation Process. International Labor
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Gruber, S., Buerkle, J., & Duncan, J. (2016). SAP –Leading the Digital Transformation. SAP SE
Investor Relations. , 1-32.
Mindy, F. J., & Wood, W. (2008). Purchase and Consumption Habits: Not Necessarily What
You Intend. Journal of Consumer Psychology , 1-16.
O’Donnell, S. W. (2010). The Importance of Information. Top Line , 1-1.
Radomska, J. (2015). The Concept of Sustainable Strategy Implementation. MDPI , 1-10.
Smith, B., Hurth, J., Pletcher, L., Shaw, E., Whaley, K., Peters, M., et al. (2014). A Guide to the
Implementation Process: Stages, Steps and Activities. ECTA Center , 1-15.