TISCO Tata Iron and Steel Company Limited is the world's sixth largest steel company which was established by Indian businessman Jamshetji Nusserwanji Tata in 1907. It is also the largest private sector steel company in India in terms of domestic production. The company is the fifth largest steel producer in the world as it produces 18 million tons of steel in India and 52.32 million tons overseas. [1]
The aim of the company was to maintain its reputation in the steel industry. For this they had to do some advancement in their technology because, the legacy system was outdated. Basically they wanted to transit from a production-driven company to customer-driven company which will make them more Customer friendly. [2] For the improvement in the system they had implemented ERP SAP 3 which later on resulted in a success of company. Generally it's not so easy to be successful in the ERP implementation process, but as the company had taken right decision on right time, they were able to get the desired results from the implementation
2. ERP Implementation
2.1 Need of an ERP System
TISCO was facing two main problems. Firstly, the systems which were they using were outdated and it was also having some errors. Secondly, the system was mostly designed for the process and which made them to pay less attention to the customer needs. [3] Finally, company decided to implement a new ERP system which is error-free as well as less complex and which will also help them to become more Customer friendly.
2.2 ERP System Selection
The company wanted such an ERP system which would satisfy the factors such as time, profit, cost, compatibility, support, transparency and future requirements. While working on these factors company was also forecasting the condition which will become in the future after implementing any ERP system. So finally after a thorough study, the company ended up with the SAP 3 ERP which was fulfilling all the requirements of the company. [2]
2.3 ERP Implementation Process
The ERP implementation process is a very time consuming because it has to go through some major factors like planning, designing and testing. Most important thing is that the system should meet the company's demands. Thus, to implement the SAP ERP system, a period of 8 months was allotted which was a big challenge for the company. [3] But the company was able to meet the deadline successfully.
3. Factors Contributing to Success
3.1 Planning
The initial step for the company was to list out the goals that are is to be achieved. According to the goals they designed the process plan. TISCO wanted to create such an environment which will always make them to learn something new by which they can make changes to make the system more efficient. They had also planned about the changes that can affect the system in future. By this they can immediately implement the solutions for the changes without wasting the time. The company wanted the software to work in such a way that it would improve the products and services which will make the company to maintain its reputation in the steel industry.
3.2 Process Organization
It's always good when the process is divided into some parts so that each process can be handled separately with less complexity. So the company had divided the whole process into two parts. The process which was more complex and had more transactions was defined as the 'Hubs' and the process with less complexity and transaction was defined as the 'Spokes'. [2] Hubs are the major part whereas the Spokes are the minor parts. Spokes were attached to the Hubs because finally the whole process was going to run together. These processes were designed into the SAP modules. Enough training had been given to the developers to work on these modules so that they can handle the problems which might occur while testing these modules. The company had given deadlines for each module because the final task was to run all these modules at the same time. And at this point if any kind of errors would occur then, there should be enough time to work on it. So, In order to run all these modules together the developers had to do the proper implementation of their knowledge.
3.3 Final Stage
At this stage the company was ready with all the modules and was preparing to go live with the entire project. This stage was very crucial for them because this is the moment when they will get to know the results. As the company did not face any problems while working on the project, the desired results were expected. They had done the thorough analysis of the whole process and implemented the solutions for the changes where they were required. So the company was quite confident about the outcomes.
3.4 Result
Finally TISCO got success in SAP ERP implementation project. This project helped the company in terms of financial, technical and managerial aspects. [3] This project made company to update its customers daily and providing a good quality of service across the country which led to the improvement of customer management. This project had led company to an improved productivity, enhanced customer service, speed delivery and reduced cost. The system was less complex and a user friendly which was the biggest advantage. This project helped the company to reduce the product cost and gain more profit in the industry.
3.5 Future Steps
The success of this project was motivating for both the TISCO and the ERP vendors. Now TISCO is not only using this software but they are also going to work on it further to gain more benefits for the company as well as for the stakeholders. [3] This will help company to make more profits and satisfy the customer needs efficiently. In this way the company can keep its existing hold in the steel industry.
4. Conclusion
Many big companies have failed to implement ERP systems. Due to this fact many companies doesn't prefer to implement ERP. But this fact did not affect TISCO's morale. They worked very hard on the project which made them more confident about the results. The speed at which they worked and the way they synchronized all the work was remarkable. This was one of the major contributing factors for the success. Finally the project gave the desired results and fulfilled all their expectations.
5. References
1. Wikipedia (2007) http://en.wikipedia.org/wiki/Tata_Steel
2. Bhavish Sood, (2001): Indian Express Group (Mumbai, India)
http://www.networkmagazineindia.com/200210/case5.shtml
3. Crewind Technologies Pvt. Ltd. (2009)
http://www.erpwire.com/erp-articles/saperp-success-in-tisco.htm
Hershey Foods Corporation
Index
1. Introduction………………………………………………...……………………………….10
2. ERP Implementation...……………………………………………...……………………...11
3. ERP Failure…………………….……………………………………………………………12
3.1 Major Mistake.…………………………………………………………………………..12
3.2 Consequences……..…………………………………………………………………..12
3.3 Effect on The Market…………………………………………………..………………13
3.4 Another Mistake.………………………………………………………………………..13
4. Failure Avoidance………………………………………………………………………….14
4.1 Failure Avoidance Learning.……………………………………………...…………..14
4.1.1 Have a Game Plan….……………………………………………...……………14
4.1.2 Focus………………....……………………………………………...……………14
4.1.3 Testing………………..……………………………………………...……………14
4.1.4 Data Migration…….....……………………………………………...……………15
4.1.5 Think about Future…..……………………………………………...……………15
5. Conclusion………………………………………………………………………………….16
5. References………………………………………………………………………………….17
1. Introduction
Hershey was founded by Milton Hershey as Hershey Chocolate Company (HCC) in 1894. Hershey is one of the leading manufacturers of chocolates, confectionaries and beverages across the world. The company manufactures lots of luscious products in various assortments. They also produce sugar free products which are suitable for customer's nutritional constraints. The company has operations throughout the world and more than 12000 employees are working in it. [1][2][3]
ERP implementation process should be carried out without making rash decisions. And thorough analysis should be done for every aspect. Even if there is a small possibility for errors while implementing ERP system, these errors shouldn't be neglected; because these small errors can cause a great loss to the further process. Once the initial stage of the failure is being seen then it's very difficult to get back on right track because the developers has to find the solutions for the errors in the system and the time given for the project is also limited. Hershey had taken a right decision on wrong time and due to this they had failed to implement ERP system.
2. ERP Implementation
Hershey was running on the legacy systems which were not much suitable for further new generation processes. So to avoid the Y2K problem, company decided to replace this system with the new system which is more reliable. Initially they decided to implement three systems one after the other.
SAP R3: To replace the existing legacy system they chose SAP.
Manugistics Group Inc.: This was chosen for production forecasting, transportation and scheduling management.
Siebel CRM: This was selected for managing customer relations and to keep a track of requirements in the market. [4]
The ERP system should be implemented in such time when the business process has a slow movement in the market so that, the company can fully concentrate on the ERP implementation process. And if any problem occurs in this state then the company can put full efforts to solve them as this period is dull for the business. Any business will get to see such period in some years. So it's the best time to make changes in the business in order to make profits in a period when there is a good scope of business.
3. ERP Failure
3.1 Major Mistake
Hershey's major mistake was that, they started to implement SAP ERP system in a period of time when there was a good scope for business. At this time they had to pay full attention to the ERP implementation process. [3] On the other hand they were losing their focus from the business. After getting finished with the implementation process, the rollout appeared to be smooth. But later on it started giving problems related to order fulfillment, processing and shipping which caused a big problem for the company. At this point it's very difficult to make changes in the process because this is the period when the other companies try to acquire a good hold in the market. So the company has to continue with its existing system.
3.2 Consequences
When the company was facing many problems in the system, they started not only to reconstructing the whole process but also spent a lot of time and efforts behind it. Due to this they were not able to focus on their existing business as they were fully concentrating on the problems that had been occurred in the ERP implementation process. When they realized this, they started to pay more attention on the existing business. But this created another problem which was, now they were less focusing on the ERP system. This situation created a lot of confusions in the company. Even though concentrating more on ERP they got one more shock; the ERP was not working properly because there were some final touches which were not done.
3.3 Effect on the Market
Due to all these problems with the ERP system, the company had to face a great loss in the market regarding order fulfillment, processing and shipping. [1] The retailers who had ordered for the products were not able to get them on time even if the company had ample supplies stocked at the warehouse. This lowered the reputation of the company in the world of business and caused a huge loss for the company in terms of money. It was a very hard time for the company. They were in a deadlock state, where they were not able to understand what step should be taken next.
3.4 Another Mistake
As the company had implemented one ERP at the wrong time, they also implemented other ERP's such as Manugistics Group Inc. and Siebel CRM. [1] They selected the Big Bang approach to quicken the implementation process where several modules are implemented simultaneously. Moreover, some of these modules were not tested before implementing. This created further problems for the company. They had already messed up with the first ERP implementation now they had messed up everything. Instead of going from a bad phase to better phase they were going from bad phase to worst phase. When the company had done with the problem solving of the SAP ERP they came to the other two ERP's. While working on it when they tried to make the whole system to work together, it wasn't working properly because there were several changes made in the SAP which made them to lose the continuity.
4. Failure Avoidance
The failure could have been avoided if the company would have taken the right decision on right time. Hershey is a highly renowned company so they shouldn't have taken the rash decisions related to the business advancement. They could have implemented the ERP's in a dull period when their business wouldn't have affected much even if the implementation process would have given the errors. [3]
4.1 Failure Avoidance Learning
4.1.1 Have a Game Plan: Before starting to work on any ERP implementation process, some planning has to be done. First of all decide whether this time is perfect to implement ERP or not. Then enough period of time should be allotted for the whole process so that there will be no need to take any rash decisions. Hershey failed to follow this strategy and started to implement without thinking about the consequences.
4.1.2 Focus: This is a major aspect of a successful ERP system. The company should pay full attention to the implementation process. Because once something goes wrong, it affects the entire system. So the company should focus fully on what it's doing. Hershey was not fully paying attention to the implementation process which resulted into the loss for the company
4.1.3Testing: Each and every module of the entire process should be tested before implementing. Because after testing only we can come to know the problems related to the module. After testing, the software can work more efficiently as this will reduce the chances of the errors. For proper testing enough training should be given to the developers so then they can think in several ways to solve any given problem. Hershey did not test some modules and directly implemented in a big bag fashion which caused several problems.
4.1.4 Data Migration: Data migration is a very important aspect of any successful ERP system. Running all the modules together need a good synchronization of data. So the data migrated from one module to another should match the requirements of the receiving module. Data migration plays a very important role in inventory management. It helps to keep a track on the stock of the inventory. Hershey's software was malfunctioning due to the problems so it was making difficult for the company to migrate the data efficiently.
4.1.5 Think about Future: Implementation is the initial process, but the company also has to think about the future. Like, whether the ERP system will fulfill all the expectations. Moreover, make a plan of changes that are need to be done in future if required by the system. As the Hershey was facing the problems regarding the SAP, later on they did not care much about the future and implemented other ERP's too which created furthermore problems.
5. Conclusion
Hershey could have avoided this failure if they would have been more focused towards the ERP implementation process. Instead of keeping an example of successful ERP in mind they should have kept the example of failure ERP, so then they would have come to know, in what factors company fails to implement ERP. But Hershey did exactly opposite to this and they did the very common mistakes which many companies do like ERP implementation at wrong time, not changing the business process and implementing without thinking about the future.
