CASE STUDY MAIN THEME: 'The Role of ERP Systems in Industry 4.0'

"""" CASE STUDY Power+ SA (Note: This company is fictitious and serves as an example. You will not find any information about this virtual company on the Web).

Overview

Power+ SA is a power generation company in South Australia with a history that goes back to 1865. It is involved in the generation and retailing of electricity for residential and commercial use. It is the largest electricity provider in SA and was the third largest carbon emitter in the state in 2020. Power+ SA is investing into renewable energy assets but is struggling with the transition of traditional coal and gas fired power plants because of the fundamental different technology used. As of 2022, Power+ SA has more than 500k customers but is losing customers to its main competitors AGL and Origin in recent years. The operating entities within Power+ SA are: A head office in Port Adelaide is providing offices for the Finance/Accounting, Human Resources and Procurement division. A large coal-fired power station in Port Adelaide producing around 150 megawatts. A gas-fired power station in Noarlunga producing around 100 megawatts A windfarm on the Yorke Peninsula producing around 80 megawatts A solar farm close to Port Augusta producing around 100 megawatts. The coal- and gas-fired power station account to 70% of the revenue of the company. The remaining 30% of revenue comes from the renewable energy sources. In recent years the revenue of fossil fuel powered stations is in decline versus the revenue of renewable energy sources is increasing. Structurally the company has a Board of Directors comprised of a Chairman and 4 other Directors. The senior management of the company consists of the General Manager (CEO), the Chief Financial Officer (CFO), the Chief Information Officer (CIO) and the Heads of Marketing & Sales, Procurement (which includes supply chain management) and Human Resources. Power+ SA has a workforce of more than 1,500 permanent staff. About half of the staff works in the coal- and gas-fired power plants and remaining staff works either in the headquarter or in the renewable energy sector. The IT department has a staff of 65 of whom all are University or TAFE IT graduates and four of the IT staff have had some direct experience working with SAP systems. The CIO previously worked for a company that implemented an SAP system and he held a senior managerial role during this implementation. Many of the accountants and engineers employed by Power+ SA have good IT skills that are relevant to their jobs. Power+ SA is generally regarded as a well-managed company with a competent team of managers at all levels and, a well-trained and dedicated workforce. Most of the senior and middle-level managers have been with the company for 10 years or more. The company has had very few issues with the industry regulators, government departments or the taxation office which would indicate that they have good policies and procedures and maintain good documentation.

The Power Plants

The coal-fired power station in Port Adelaide is the largest and oldest power station operated by Power+ SA. It was constructed in 1970 with a capacity of 80MW (4x 20MW generators) and later extended in 1985 with another 70MW output (2x 35MW generators). There exists a 12-year plan to decommission this power plant gradually by mothballing the older four generators in the first 5 years followed by mothballing the remaining two generators in the next 7 years. The coal is provided by local SA mining companies. A contract for 6 years is negotiated with the company offering the best deal. The selection criteria for best offer are price, quality of the coal and frequency of delivery. The gas-fired power station in Noarlunga was commissioned in 1990 and was modernised in 2010 with some sensor technology for the generators for improved asset management and detailed monitoring of generator performance. Although the long-term plan of Power+ SA is to move entirely to renewable energy sources, the SA Government has requested to operate this power station for at least another 15-20 years to secure the supply of energy in emergency like extreme weather events. The required gas to operator the power station is procured from coal seams which is provided by a business partner which is partly owned (20%) by Power+ SA. The windfarm and solar farm are modern power generation farms which have been built in 2010 and commissioned in 2015. They consist of state-of-the-art technology with built-in sensor technology and can be fully operated remotely. Maintenance of the windfarm is low with manual inspections every 6 months. The solar panels only need regular cleaning every 6-12 months. They might eventually be replaced by a newer generation of solar panels in 15-20 years.

Customers

Power+ SA provides energy to private consumers and businesses. Roughly 80% are private which are taken care of by the Customer Relationship Department (CRM). The CRM department works closely with SA Power Networks which is maintaining the powerlines across Adelaide. In case of a power outage, private consumers can report on the Power+ SA website or mobile app, and the information will be passed on to SA Power Networks if the fault is part of the electricity network. Local businesses make up to 20% of Power+ SAs customers. They are managed by a separate Business Customer Relationship Department which can offer special deals and conditions for businesses, for example, special deals with they are operating a very large area of solar panels.

Distribution channels

Energy for households and businesses is provided through the electricity grid managed by SA Power Networks. Power+ SA has invested into an electric vehicle charging network in collaboration with RAA and local car insurance company BestSA. Currently the network is operating 20 charging stations in the Adelaide CBD. It also invested into electric bicycle charging network in the Adelaide Hills in collaboration with local e-bike distributor HillsBike.

Strategy

The companys strategic plan for the next 20 years includes: Move entirely to renewable energy production. This goal is challenging because the existing fossil fuel power station are very old and need to be decommissioned. They cannot simply be upgraded to renewable energy stations. Another challenge is the local government requirement to keep the gas fired power station running for another 15-20 years as a backup in case of power failures during extreme weather events. In the next 10 years, Power+ SA plans to install two large battery sites close to the windfarm and solar farm. It relies on external suppliers to provide and install the batteries. The current demand on batteries is very high and it is predicted that demand remains high. Power+ SA needs to evaluate offers from suppliers where local providers are preferred. Over the next 15 years, Power+ SA plans to export energy interstate to Northern Territory and Tasmania and overseas using large batteries on container ships. This expansion of service will be undertaken with the one of the largest ship freight companies Monk. Currently, the number of business clients make up 20% of the customer base. Power+ SA plans to increase the number of business customers to 35% with special deals in combination with new solar panels to be installed on business sites. If successful, it will need to increase capacity to its energy production and hire new staff for managing the increased number of business customers. The current EV charging network in the Adelaide CBD was only a test run. In the next 10 years, Power+ SA plans to install charging stations across the Adelaide suburbs and regional areas. The goal is to create a network where the maximum distance between stations is not above 200 kms which is the average distance of EVs at the moment.

Competition

The major competitors of Power+ SA are AGL and Origin. Both have power stations close to Power+ SAs power stations and they also invest heavily in renewable energy. This led to an increased competition not only for attracting customers but also attracting staff who is trained and experienced in renewable energy production. Retraining staff from conventional power station to renewables is possible but requires experienced senior staff to train them. Currently the demand for people with experience in this sector is very high.

The Current Information Systems

Power+ SA currently does not run an ERP system. The Board of Directors and the Senior Management of Power+ SA are aware that implementing an ERP system will require changes to the way the business operates in most areas. This may require changes to the staff with new staff being hired and some existing staff made redundant. The Information Systems to support the companys fossil fuel power stations are out of date. There is an integrated financial accounting system called SimpleFinance that the company uses in its headquarter, but this system does not support marketing and sales. Gas and coal supply is tracked through a software called SupplyAdvanced that never got integrated with SimpleFinance but the vendor payments are handled through the accounting system. The Procurement division has a computer system that runs a proprietary SCM (Supply Chain Management) system OnDemand which was built in-house by the IT department. It is not integrated to any other system. The Sales and Marketing office has a separate computer system called SD-Direct which runs a proprietary logistics program that helps with the sales and monitoring of energy consumptions. The information systems to manage the solar and windfarms are state of the art with mobile device interfaces and can be fully controlled remotely. They also provide analytical capabilities to monitor the state of each windfarm station and solar panel. However, the system is not integrated with the remaining system. The headquarter is basically managing the coal/gas-fired power station separately to the solar- and windfarms. If customers (private or business) have solar panels installed, then there exists a digital meter on site which monitors energy production and energy consumption. The information is transferred automatically via the mobile network. 90% of consumers who do not have solar panels installed still have a manual meters installed which need to be read by someone from Power+ SA every 3 months. A big problem is the current HR system. The company is using a cloud-based system called HireNow. It is great to track the full hiring process from the first contact of a candidate, setting up interviews and assessment centres up to the point where an application is successful, and the candidate is hired. However, it is not integrated with their system MyStaff that holds information about current employees. This makes the planning of the future workforce difficult regarding training and passing on all relevant information from the hiring process into the employment system.

Requirements for a New ERP System with Industry 4.0 capabilities

In short, the company wants an ERP system that can expand with the business and replace most, if not all the legacy systems currently in place. They also want a system that can grow and expand as the business grows and be up to date with information and communication technology (ICT). They want to integrate the management of the gas- and coal-fired stations with the management of the renewable energy sourced stations. They want access to the system worldwide in case somebody overseas (consultants, shareholders, etc.) needs to access it. It should also be easier for staff to switch from office work to work at home if needed. Senior management would like to have similar IoT capabilities (sensors, predictive analytics, etc.) which are currently installed at the wind- and solar farm, to be installed in the gas- and coal-fired stations so accurate monitoring and prediction of asset performance is possible and information can be connected in real time with a system at the headquarter. All company salespersons and representatives will be issued with iPhones and iPads and therefore an adequate mobile infrastructure is required. The Power+ SA management wants to be able to take full advantage of all e-commerce possibilities to improve and expand their business. Their current website which is used to enable customers to contact for support, must be integrated into a new ERP system and expanded to allow up-to-date e-commerce including negotiating contracts. The Directors of the company have noted that discussion about green energy, fossil fuel and climate change conversation on social media sometimes involve the name Power+ SA. They are keen to incorporate tools within the new system that will enable the company to monitor social media conversation and be able to quickly react to concerns of customers and citizens. """""

INSTRUCTIONS

Read the case study provided above. Put yourself into the position of a consultant to the company described in the case study. Your ultimate aim is to convince the company Board to invest into Industry 4.0 technology. What information would you need to support your claims and recommendations?

Write a research report that explores the relationship between Industry 4.0 and ERP systems and how it is relevant for company in the case study above.

You will need to: use relevant literature to support your claims; synthesise key concepts from the literature; make logical connections between concepts; and present a coherent argument about the relationship between ERP and Industry 4.0 and how it is applicable to the company.

Consider how you will logically guide the reader through the report.

You are encouraged to create an annotated bibliography and report outline first to plan your research report.

This is a suggested structure for your report:

Title page

Table of contents

Executive summary

Introduction. This should include aims, motivation, and overview of the structure of the report. (Approx. 150 words.)

Body sections. Break your argument into appropriate sections that will guide the reader through the literature and key concepts, as they relate to your research question(s). Use sub-headings (with Word Styles) as appropriate. Elaborate one key concept in each section and cite relevant literature to support your claims. Any content you take from the literature should be appropriately paraphrased and acknowledged. You are not allowed to use more than three direct quotes in this report. (Sections 250 - 450 words each; overall length 1200 words.)

Summary and conclusion. This should highlight the most important ideas contained in the report, without adding any new information. (Overall length 200-250 words.)

References