Enterprise Resource Planning Adoption at Nestle - myassignmenthelp

Question: Discuss about theEnterprise Resource Planning Adoption at Nestle. Answer: Introduction According to Garca-Snchez and Prez-Bernaln (2007) Enterprise systems (ES) refers to comprehensive software application packages that support data analytics, business processes, reporting in complex organizations, and information flows. Even though ES are largely packaged enterprise application software (PEAS) systems, there is a possibility of modifying and customizing them to support specific organizational wants. As such, some of the common ES include custom relationship management software, enterprise planning system, and enterprise resources planning (ERP) systems (Davenport, Harris Cantrell, 2004). Several organizations have adopted different enterprise systems to meet their urgent needs of streamlining workflow or ease the management of firms' activities. In particular, ERP offers companies' chances of re-engineering their business processes, empower employees or users with real-time access to all data of the company in real time and consolidate data. Besides, it also helps or ganizations manage branches that are geographically apart. This report will, therefore, look into a case study of a real-life example of how an organization implemented an enterprise system to solve an identified business problem. A Case Study of ERP Implementation at Nestle, United States of America (USA) Nestle USA is a subsidiary of Nestle SA, a candy-making giant with its headquarters in Switzerland (Dieringer 2004). To operate as a giant and be competitive, the management of Nestle SA saw the need to standardize its operation considering the high number of employees and operations spanning to over eighty countries. The role out of the ERP targeted business intelligence modules, fulfillment, demand planning, supply chain, direct procurement, procurement, production management, planning, accounts receivables, and accounts payables. This decision was reached at after successful implementation of ERP in the United Kingdom (UK) companies who had over six thousand users where there was a need to re-engineer work processes and practices, tighten the supply chain, and leverage the size of the organization. Similarly, Nestle USA had challenges in its production system that prompted the adoption of the ERP system. Before the implementation of the ERP, Nestle USA used Business Excellence through System Technology (BEST) where there were twenty-eight points of customer entry and nine different ledgers (Dieringer, 2004). As such, there was dire need to bring down these 28 points of entry and 9 ledgers to one. In additional to reducing the numbers, there was an interesting problem with the vanilla. The problem with Nestle USA arose from the fact that all the branches operated and worked independently, making their own production and management decisions. A close examination of the various companies located in the USA revealed several worrying redundancies, where 29 different prices for vanilla existed in Nestle USA's brands that were paid to a particular vendor (Dieringer, 2004). This state of affairs thrived on the fact that each factory negotiated their own deals with the vendor. The vendor also reacted by adjusting his prices depending on the factory prices offered, and what he thought the company could pay. The situation got worse since each factory had their way of referring to vanilla. For example, whereas one company referred vanilla as 6635, the other referred to vanilla as 30567 thus bringing confusion to corporate managers and general decision making at Nestle SA when comparing manufacturing cost across the different plants. As such, there was a need to control data and centralize financial reporting and forecasting to bring consistency and accuracy in their operations since each factory acted as autonomous units. Furthermore, Nestle was facing severe competitive disadvantage and there was a need to use one system to improve efficiency and ultimately survive in the global economy. The Nature of ERP, its Implementation, and Adoption ERP systems make it easy to track workflow across various departments and establish a common relationship between geographically dispersed companies dealing with similar products or services. Its application has been a success in human resource management, supply chain management, customer relationship management, finance management, manufacturing warehouse management, and logistics management (Olson Kesharwani 2010). A key nature of ERP is reducing operational cost when manually tracking data and perhaps duplicating data when using different and individual systems. In addition, ERP has a nature of improving efficiency, forecasting, collaboration, scalability, and integration of information of a company. Organizations using ERP system have an edge in competition, cost saving, mobility, reporting, productivity, flexibility, customer service, security, regulatory compliance, and streamlined business processes (Spathis Constantinides 2004). Implementation of the ERP system follows six critical steps (Winkelmann Klose 2008). Discovery and Planning Start smart by identifying and assembling the right internal team that comprises of staffs, managers, executives, and owners. From here, documentation of current issues and potential solutions takes place. After documentation, construction of the project plan follows. Design This step involves configuring how the new enterprise system will look like and how the organization will use it to meet her objectives. At this stage, project and implementation team will create an important configuration, defining new roles and documenting standard procedures. Development At this point, the system is prepared with a goal of going live. Activities such as importing data, developing user training, and making necessary customizations are common at this stage. Testing The new ERP system is tested and assessed whether it can work as per the requirements. Further, fine tuning the configurations is necessary to meet all the project requirements. At this point, project team members can start working on this interface. Deployment The implementation team and project team can launch the new system or still hold on. Before going live, the final data will be loaded and validated. A further training of employees who will work on the new system is carried out before shutting down the old system. Ongoing Support After implementation and adoption of the ERP system, the project team will be working on making adjustments and changes to the system configuration as the situation may require. Difficulties Nestle USA faced while adopting the ERP While adopting the new ERP system, the management sampled a team of fifty top executives and ten senior Information Technology (IT) professionals who had the responsibility of developing a set of best practices for the Nestle USA. The team required an overhaul of the entire old approaches and adopt the new manufacturing to sales approaches that were developed. At the same time, the technical team had the mandate of implementing a common data structure across the company (Dieringer, 2004). Even though the management and the technical team were implementing these processes, employees were not part of the team designing the system. Problems started when employees resisted the new ERP system as they could not incorporate it as soon as possible. As time progressed, the implementation caused confusion as employees could not maneuver through the new system in addition to being forced to adopt the new processes. During the implementation, divisional executives did not form part of the profes sionals and the technical team in planning and development of the system. This worsened the situation further as the supervisors and employees were less willing to correct the mess that had developed. Moreover, the implementation challenges did spread to technical difficulties during the rollout. There was a hitch in integrating points between the modules. As a result, the different modules could not communicate with each other. For example, when customers got discounts from the sales person, then the account receivable portion of the system could not factor in the discount. The overall outcome was that, even after customers paying full amount, the invoice reflected partial payment (Dieringer 2004). Eventually, the management halted the rollout and the project manager removed. A new 19 member task force was formed to spearhead the new system. Important changes in redefining business requirements later saw the adoption become a success. Assessment of the Success of the ERP System According to Dieringer (2004) Nestle USA claims that two years into implementing the new ERP, they realized a saving of over $325 million. Areas such as demand and forecasting and supply chain showed tremendous improvements compared to the previous system, BEST. A sneak into the old system reveals that demand and forecasting was more manual and involved a lot of assumptions that produced poor results (Dieringer 2004). There was general improvement on trustworthy demand forecasts with the new system, business processes, and a common database. Furthermore, forecasting down the entire distribution center became very easy as all Nestle USA companies adopted the same data (Buonanno et al. 2005). Besides saving money, the entire Nestle USA came together as one organization. As such, the vanilla identification problem became history since all the factories adopted the same database (Cordn, Hald Seifert 2013). In addition, common processes that allowed centralization of functions and simplified operating procedures in developing training procedures streamlined the overall management of Nestle USA. Nonetheless, in situations where employees relocated, they could easily adapt to the new factory without spending additional time in orientation (Lall Teyarachakul 2006). Conclusion Enterprise systems are very important components of an organizational management. A proper customized system is necessary for companies to realize their goals and measure growth. From the case study of Nestle USA, it is very clear that businesses encounter problems related to systems' set up, and choosing the right system is key in managing manufacturing, finances, and human resource problems. 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