ERP Analysis and Implementation

Case Study: CLNRecycle Ltd (Manufacturing: Make to order and make to stock production)

Background

CLNRecycle Ltd (CLR) is an Australian owned and operated recycling company dedicated to providing innovative and proven product solutions made from recycled materials to national and international clients. CLR manufactures engineered recycled products and their products are mostly sold for used in Australia, Japan, and New Zealand. Their home office is in Melbourne, which is also the headquarters for the main sales office. Other regional headquarter offices are also located in Sydney, Adelaide, Brisbane, and Hobart.

The company has eight sorting centres cross Victoria, South Australia, NSW, and Queensland where they use automatic sort systems to identify the resin, ranging from manual sorting and picking of plastic materials to mechanized automation processes that involve shredding, sieving, separation by rates of density. Once the processed materials (e.g. plastics, papers, metals, and glasses) are separated from each other, they are sent to manufacturing plants. CLR has two manufacturing plants in Australia: one in Adelaide, and another one in Wollongong. Warehouses and distribution centres are also located at each of the current manufacturing plants.

The company has over 80 years of experience in producing and supplying raw chemical materials. However, being aware that worldwide environmental sustainability is a major issue, 10 years ago they decided to shift their manufacturing focus from raw chemical materials to recycled products. Since then, being dedicated to customer service, CLR is continually researching and developing environmentally responsible and 100% recyclable products. The company recently added a sales force in Hong Kong which includes a manufacturing facility and a distribution centre. The company is keen to expand its operation into India to access local recyclable materials and to develop and sell recyclable products. Further, CLR has recently opened a new sales and training office in Sweden that enable the company to access new recycling technologies as well as expanding its operation in Europe and North America.

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The company was established at 1935 as a glass manufacturing company and it traditionally has a strong hierarchical structure. Each business unit is responsible to its regional headquarter and each manager should report to a regional director located in the headquarter. The company currently has 800 employees, nearly 400 of them working in the sorting centers and in the production lines in manufacturing plants. Each of the sorting centers and manufacturing plants acts as an independent business unit maintaining separate sets of books and operating more or less autonomously.

The R&D and Product Design units are located in the Melbourne office and the director of each unit reports directly to the companys CEO. The Melbourne home office has had their own ERP system for 6 years but Sydney, Brisbane, Adelaide, Wollongong, and Hobarts operations have been supported by using a variety of legacy systems to assist their manufacturing plant, human resource, financials, procurement and sales and distribution.

In Australia, selling of the products is done with a sales force that calls on warehouse and retail sales outlets such as Kmart, Bunnings, and Mitre10. The company also presents its products in environmental expos and conferences. The Company also manufactures and sells replacement parts for their products.

Traditionally, their supply chain activities have focused mostly on local suppliers and the long-term contracts between the suppliers and sorting centers. As a regular practice, the companys CEO, marketing manager, and a senior member of the marketing team travel to trade fares around the world to promote their new products. However, they have been also looking into starting an on-line shopping cart web site and social media where they can promote their products and sell parts and products online. They are also considering providing online training to their sales representatives and staff across the world.

With a wide range of IT systems in place, the companys CIO plans to have a centralised and robust ERP system that will allow them to standardise their core business processes across their plants and offices. Particularly they seek capabilities that enable centralised procurement and sales functions. They also want to be able to consolidate financial statements as well as look at sales by product across the companies.

Current Challenges

CLR is a growing company that needs standard operations across its manufacturing, sales and inventory activities. Currently, its IT systems lack the flexibility and scalability to support its growth into new markets over the next decade. Furthermore, the current IT systems do not provide the data standardization needed for analysing the costs and profitability of different products, by sales regions and customer. As a new manufacturing direction, CLR is planning to develop non-toxic recyclable products that break down quicker in nature and is also durable enough to be used in both developed and developing countries. Again, their ERP systems need to be upgraded to support and operationalise this strategic direction. Another key strategy for CLR is its commitment to customer satisfaction by delivering the product(s) at the right time, right place, and at the right price. This may require make to order as well as make to stock products. CLR is organized around processes that are focused on adding value to their customers by generating smaller carbon footprint and by moving towards environmentally sensitive manufacturing.

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Future Business Requirements:

CLR products need to be customized for value-added resellers (VARs) by application of theresellers logo at the assembly.

Individual customers do not have direct influence over the product or its function, shape, and size; however, this is something that the Board of Directors (BoDs) is considering changing in the future to allow individual customers the opportunity to create specialised mobile devices.

Sales planning and product design are determined by management in cooperation with other staff members.

All sales are maintained in Australian/US currency only, even though the company does business with other countries like China.

The company is keen to maintain its current network of suppliers but also seeking possibilities of working with more suppliers from other countries and is considering to sources its raw materials from Korea, Japan, and Germany and New Zealand.

Emerging Business Challenges

With the fast changing and highly competitive business environment, the management of CLR have realised if they are not proactive, the emerging requirements can negatively influence the companyscompetitive advantage and market share and as such, they need to act quickly.

The traditional hyper-connected customer-centric business models were adopted by CLR a few years ago to increase CLRs interactions with its customers as customers are the real drive for change. However, one of the issues they have identified is that the company is currently very slow to identify areas of change, respond, and adapt to changing business environment.

Furthermore, workforce engagement is an important priority. The increasing mobility of managers, staff, clients and competitors, has created a huge network of mobile information and expertise. The company has realized that they need an effective and efficient way of supporting, managing and taking advantage of the networking opportunities that such a network of mobile workforce and clients offer. They are particularly interested in taking advantage of such a network for improving the design of their products and also developing a collaborative marketing strategy.

Call for Experts

Your company, Newby Systems Consultants Ltd. is employed by the CLNRecycle Ltd. to help them with the selection and implementation of a new ERP system. You as the CEO, are an expert in Business Systems Requirements Analysis and in ERP Systems Implementation. You have had extensive experience with enterprise systems projects, specifically in managing software implementations in manufacturing organisations.

You have been asked by the Board to work on the Enterprise System adoption and implementation. You need to prepare a report that helps the BoDs to make an informed decision with regards to purchasing and implementing an ERP system. Your report and recommendations should include the following information:

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A - An analysis of the current situation

A1 Business requirements and drivers

Develop a list of CLRs business requirements and business drivers (at least 10 items). Provide a briefdescription of each item on the list. Make sure your description is linked to CLR and its business context.

A2 Linking requirements to ERP functionalities

Using the list you developed in A1, create a table that includes:

1- A column of the identified items on the list

2- A column that specifies whether each item is a business driver or a business requirement

3- Identify business process(es) that can support or fulfil each of these business drivers or

requirements

4- Identify the type of data or information that is required for the successful completion of each

business process.

5- Against each business driver or requirement in the table, choose ERP functionalities that can

help CLR to meet/achieve its specific business requirements/drivers.

6- Provide a justification for each choice you made in step 5.

B - Software selection process

Using the table A2, your research of the existing enterprise systems in the market suggests that there are two suitable ERP solutions for CLR:

SAP Business Suite 4 SAP HANA (a.k.a SAP S/4HANA)

SAP ECC6

As a technology consultant, your task in this section is research these two recommended systems to identify which one is a better option for CLR. To do this, you need to examine the features of each system against your findings in section A2.

You are also required to briefly explain what other considerations are going to take into account your final selection (at least three points)? Adopt a Rich Picture approach to justify your answer. For this part, you need to consider both internal and external stakeholders.

In your report, you also need to address your proposed approach to the implementation of the selected systems (e.g. Big Bang). Justify your answer.

C- Investigation of new solutions

The companys manager (John McDonald) has recently attended an international conference onenterprise systems. In the conference, he spoke with representatives from Ariba, Concur Technologies,and CallidusCloud companies. John also wants to know if any of the products these companies are offering can help CLR to address some of its emerging business requirements.

Your task is also to research the solutions offered by these companies, and based on the method you used in section A and B, identify if any of those solutions, as add-on features/functionalities, could be relevant to CLR requirements.

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What method do you propose (e.g. Waterfall) for the integration of these systems to the selected ERP in Section B. Justify your answer based on the business and operation requirements of CLR.

D- Risk Management

Risk management is an integral part of system implementation. One of the risks that are frequentlyidentified in the literature is A lack of top management support. However, there are more other vitalrisks that might affect the implementation of a system.

In this section, you need to provide a brief definition of Risk Management and explain why managing risks is important to ERP implementations (references required).

You also need to propose a brief risk management plan. The plan should include three risks that could significantly affect the implementation of the selected system in Section B. Some research will be required to identify the most relevant risks (references required). Then you need to complete the following risk register table:

Name	Description	Source/Cause (not more than 3 for each risk)	Likelihood	Impact	Rating	Mitigation (no more than 2 for each risk)	Reference
1- Lack of top management support	CLR management does not provide resources to the implementation project	Lack of proper communication, Lack of resources, Change of priorities,	Medium-low	Sever	Significant	Develop a communication plan Predict reserve funding in the budget	Sumner, M., 2000. Risk factors in enterprise-wide/ERP projects. Journal of information technology, 15(4), pp.317-327.

You are also expected to develop a Risk Matrix to demonstrate what ratings in the Rating columnmean.

E- Change Management

ERP implementations can create many changes in organisations. In this section, you first need to provide a brief definition of Change Management and explain why managing change is an essential part of ERP implementations (references required).

You also need to propose a change management model and explain how the model can support the implementation of the selected ERP in Section B. In your explanation, you need to highlight both strengths and weaknesses of the selected change management model.

Structure of the report

Total: 100 marks (40% of the overall assessment of the unit) Your report should be no more than 3000 words and include:

1- Report Structure (7 marks)

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Title Page

Exec Summary (2 marks)

o No more than 2/3rds of a page

o Shouldprovideanoverviewofthereportoutcomes

Table of contents page (0.5 marks)

Introduction (3 marks)

o You will be required to provide the purpose and a brief overview and the structure of the report.

Scope (1 marks) o This section discusses the breadth and depth of the report

Audience (0.5 marks) o This section discusses whom the report is going to

2- Project Background (5 marks)

This section briefly discusses the project and its motivations

This section should not be less than one page

3- Analysis and Evaluation (70 marks)

An analysis of the current situation (20 marks)

Software selection process (15 marks)

Investigation of new solutions (10 marks)

Risk management plan (15 marks)

Change management plan (10 marks)

4- Overall summary (5 marks)

An overall summary of the report should be identified here. This should link to findings

at each point to the objectives of the report. This should cover at least half page. 5- Recommendations (8 marks)

This section should offer recommendations to the BoD and CEO with regards to the findings of section B, C,D, and E

6- References (5 marks) Citation: You need to follow Harvard Style