Vandelay Industries, Inc

IS 650 – Case Presentation

By Carl Cornell, René Fitterer,
Sutjipto Salim, Rosie Schwarz

Company Background

Manufacturing industrial process
equipment used in the production of
rubber and latex

Founded in Minnesota during World
War II

Grew through acquisition
 Plant treated as revenue centers
 High degree of independence
 Heterogeneous IT Infrastructure

1
Company Background

Growing competition in mid 1980s
 Restructuring
 Lean production
 Resizing the company
 Return to profitability in mid 1990s

Identification of short comings
 Higher priority to manufacturing and order
fulfillment
 Requires integrated systems and processes

Existing Information Systems

Heterogeneous Infrastructure
 Plant-individual solutions for:

MRP

Forecasting

Capacity Planning

Scheduling

HR

Lack of corporate-wide system integration

Except: Single Financial Information
System

2
Existing Informations Systems

Challenges:
 Scheduling: Required manual effort
 Forecasting: Monthly planning vs. weekly
customer orders
 Ordering: Manual handling
 Delays & Losses
 HR: Incompatibality Redundancy
Problems with Confidentiality
 FI & Accounting: Lack of Integration

Integration into a single ERP system

 Purchase and install a single ERP system
 Incorporate functions of previously
fragmented software
 Standardize practices across sites
 Access to company-wide data
 Co-ordinate and manage Vandelay sites
more tightly
 Centralization

3
SAP R/3

Why SAP?
 Client/Server Technology
 Graphical User Interface – Ease of Use
 Scalability
 Modularity, functionality & integration

Modules share and transfer information

Single database

Interconnectivity to other applications

Deloitte & Touche Consulting Group/ICS

Specialized in SAP implementations

and business process reengineering

Huge effort of configuring SAP to
companies’ needs (8000 tables)

SAP typically satisfies 80-95% of
customer needs without modification

80% Process design – 20%
Implementation

4
Implementation Strategy

Clean Sheet
 All four dimensions of change are explored
without constraints (strategy, process, people,
technology)

Technology-enabled Change
 Technology is selected, which influences the
other three dimensions

Vandelay already chose their technology
(SAP)  technology-enabled change

The Vandelay Project

Estimated Duration: 18 months

50 full-time employees

Budget: +$20 million

Implemented at:
 8 Manufacturing sites
 4 Order entry locations
 Corporate Headquarters

2/3 of employees will need training

Business Process Reengineering

5
Team Structure

Focus on:
 Project Management
 Change leadership talent

Steering Committee – 8 people
 Business Strategy – monthly meetings

Project Team – 20 people
 Implementation specifics – full time

Change Management

Project Team Members Selection
 Selection based on skills and
characteristics of employees
 Optimal skill set for Project Team
vs.
 One representative from each of
Vandelay’s implementation
 Project champion at each location

6
Change Management

Centralization vs. autonomy
 “Input by many, design by few” ?
 Tightly defined processes vs.
encouraging innovation and autonomy
 Resistance to externally defined ‘best
practices’

Change agents
 Overcome resentments
 Encourage enthusiasm for new system

Problems

Engineers are enthusiastic
 Eager to “play” with the new system
 Need to accept that new centralized
system introduces new constraints
 Resentments

Heterogeneous software and business
processes

7
Possible Solutions

Change business processes to match
software capabilities
+:easy maintenance, “best practices”
–: employee resistance

Interface R/3 to other software solutions
+:more flexibility, use of legacy system
–: cost, loss of BPR benefits

Extend/modify R/3 to match requirements
+:compatibility with Vandelay’s processes
–: no SAP support, maintenance,
reducedintegration

Recommendations

BPR: Change the business process to fully
utilize the R/3 SAP software

Keep engineers in the loop to avoid
resentments

Project Champions

Banner and Online Campaign

Reasons:
 “Best practices” – maximize benefits
 Standardization throughout company
 Maintenance and upgrades – industry-wide

8
Thank you

Q&
QUESTIONS
ANSWERS