i) Comment on the project team chosen to lead the SAP implementation at NIBCO. Why were individuals with certain skills preferred? A good answer should analyze selection of each

person having a specific skill.

2. ii) Did SAP implementation affect business processes at NIBCO? What were these processes? Please describe. Analyze the benefits or the problems associated with changes if any.

3. iii) What is VMI project described in the case? What was the purpose of implementing this project? Was this project a success? Give reasons.

4. iv) The last page of the case mentions certain questions facing the IT director of the firm pertaining to the implement a data warehouse. What would be your advice to the CIO in each of these questions?

   

    

   
   

VENDOR-MANAGED INVENTORY AT NIBCO Headquartered in Elkhart, Indiana, NIBCO is a worldwide Initial SAP R/3 Implementation Project provider of flow control products (valves, fittings, hangers, sup ports, seismic bracing and struts) with over $400 million in revenues and a 100-year history. As a privately held firm, by 2003 NIBCO had about 3000 employees (referred to inter- nally as associates) and manufactured more than 20,000 dif- ferent stock keeping units (SKUS) in manufacturing facilities pri- Every time someone would stand up and (present their long- range plan), they'd say we could do this wonderful thing. "but." and the "bur would be that we needed good systems. This led to a fundarmental change in the way we viewed IT. -Rex Mortin, Chairman, President and CEO, NIBCO marily in the United States, but also in Mexico and Central In 1995, the firm developed a long-range strategic plan that called for radically improved information flows in an attempt to NIBCO's flow control products (made from plastics and ensure company survival and growth. A business operations metals manufacturing processes) are used in several indus- manager was released full time by early 1996 to develop task tries, including the residential and commercial construction, force recommendations for an enterprise resource planning industrial, and irigation markets. Two thirds of its sales are in (ERP) package and implementation partner selection. NIBCO's commodity markets, and its major customers include large executive leaders endorsed the internal recommendation that wholesalers such as F. w. Webb; large ("big box") retailers such SAP R/3 be purchased and implemented by December 1997. Its selected implementation partner was IBM, By the end of Europe. as Home Depot, Lowe's, and Menard's; hardware cooperatives such as Ace Hardware and True Value; and a substantial num- ber of smaller customers. The remaining one-third of its sales 1996, NIBCO had become one of the first midsized manufac- turers in North America to begin planning a "big bang" SAP are from make-to-order products. These make-to-order products implementation for R/3 modules to replace most of its legacy are marketed and sold by a direct sales force that works with systems-at its headquarters, 10 domestic manufacturing engineering firms, architectural firms, and contractors that plants, and four newly consolidated distribution centers. The internal project team was led by a trio of senior man- agers with accountabilities for business process, technology, trol products, competing on both low price and differentiation. and change management. Other company directors partici- Because of the low growth opportunities within its commodity pated as business process experts (business review leaders), and power users from the various business functions were tomers and increasing market share. NIBCO therefore strives to dedicated full time to the project team or played part-time be the manufacturer of choice not only as a result of its relia- roles as extended team members from October 1996 through bility as a supplier and low costs, but also as a result of its the end of 1997. On December 30, 1997, NIBCO went live value-added services. Competing on service has therefore with version 3.0f of SAP R/3 sales and distribution, production become an even more important way for the company to dis- planning materials management (including warehouse man- tinguish itself in commodity markets: Competing on superior agement), and financial and controller modules. All company employees normally included in the bonus program were rewarded with a one-time project bonus for a successfully functioning system that was implemented as planned, on-time require specialized flow control products for custom projects. NIBCO's mission is to be the worldwide choice in flow con- markets, there is fierce competition for retaining existing cus- product quality alone is not enough. Copyright 2007 by Carol V. Brown, Mohan V. Tatikonda, and Iris Vessey. This teaching case is based on a larger case study sponsored by SAP America for which the authors conducted interviews with managers at NIBCO. A full case report entitled "NIBCO: mySAP Supply Chain Management is available from the authors. and within the approved $17 million budget In the four years following its initial SAP R/3 implementation (see Exhibit 1), NIBCO implemented new functionality (human resources modules and e-business) and also implemented 295