MGT576 Supply Chain Management Enterprise Resource Planning (ERP) Exercise Introduction: Enterprise Resource Planning (ERP) refers to the systems and software platforms used by organizations to manage day-to-day business activities, such as accounting, human resources, materials management, procurement, project management, contracts administration and manufacturing. (https://www.oracle.com.applications/erp.what-is-erp.html) Benefits from the implementation of an ERP are significant. Real-time information can improve business insight and assist in lowering costs. Utilizing the same data enhances integration with other internal functional areas, as they are viewing the same standardized data. And this enhances collaboration with external stakeholders, such as suppliers, subcontractors and customers as data can be protected and shared in a seamless environment. In addition to integrating information flows across business functions, ERP systems also serve as platforms for more advanced applications in supply chain management. However, implementation of an ERP system can be costly and very complex. (Plant and Wilcocks). To manage costs, providers of ERP solutions have begun to offer cloud solutions. Cloud ERP solutions have several benefits. The solution is not on the customer's proprietary servers, making updates easier, as well as increasing connectivity both internally and externally. Research has found cloud solutions offer scalability, reliability, and lower maintenance costs (both implementation and ongoing costs). (Elmonem, Nasr and Geith). Problem Description: Ryan Gosling, the vice president of supply chain management for TMZ Industries, sat in his office, contemplating what he had to tell the company executive leadership team at tomorrow's meeting. During the past two years, lead times for transmitting orders between TMZ Industries six strategic business units (SBUs) were getting longer and longer; meanwhile, the number of incorrect orders, inventory levels, locations and stock outs were dramatically increasing. Six weeks ago, the CEO of TMZ Industries, Kelly Clarkson, had asked Ryan to form a task force to identify the underlying problem or problems and to develop a plan to solve them. TMZ Industries - Corporate Background: TMZ Industries develops and manufactures gears and related engineered components, mostly used as replacement parts in heavy industrial equipment. With sales over $7 billion dollars annually, TMZ serves the aerospace, automotive, recreational vehicle, medical, military, off-road vehicle and power generation markets. TMZ is organized into six SBUs serving each of these markets. Since its founding, TMZ Industries has grown by expanding on its core strengths - innovative designs, high-quality engineering, and a strict, almost fanatical adherence to quality standards, and delivery schedules. The company prides itself on being the most responsive in the industry and offers "the 12- hour guarantee". For most of its product lines, TMZ promises to pick (or manufacture, if necessary) and ship products within 12 hours of receiving customer orders. Six years ago, TMZ executive leadership team sought to grow sales by expanding beyond North America. They targeted Vietnam, India, Indonesia, Brazil, Argentina, China, South America and select Caribbean islands. During this time, TMZ Industries acquired over 30 different companies, many of which were leaders in their regional markets. With some 50,000 different stock keeping units (SKUs), there was a concern that the acquisitions caused unnecessary duplication of part numbers and SKUs. Subsequently, a corporate initiative identified and eliminated redundant or unnecessary SKUs, resulting in a 37% reduction in SKUs. The 12-Hour Guarantee Problem: While expansion had given TMZ Industries 15 major distribution centers and a sales presence in 20 countries, increasingly TMZ was failing to meet its 12-hour guarantee. The standard was to have 95% of orders meet the 12-hour guarantee. Two years ago, only 83% of orders were shipped within 12 hours. Last year this rate had fallen to 71%, and year-to-date performance suggests that the downward trend will continue. To address this problem, Ryan formed a task force consisting of the supply chain directors for each division. Over a very intensive six-week period, the task force visited customers (especially key accounts), distribution centers, and manufacturing facilities. The task force made several key observations: 1) TMZ Industries was using at least 22 different MRP systems and 4 "home grown" systems; 2) Many of the acquired companies were still using legacy sales and billing systems, each with its own unique dataset; 3) The different systems had difficulty "talking" to each other. Often, communications were delayed and errors created as orders generated by one system were manually entered into the other system; 4) Each group believed that it needed to maintain its own MRP or "home grown" system because its unique features were necessary' and 5) In many cases the bills of materials were inaccurate because engineering changes introduced by the newly acquired companies had not been incorporated into the bills of materials. The Task Force's Recommendations: After consulting with some of the major MRP/ERP software providers (SAP, Cost Point Deltek, Oracle and QAD), the task force recommended that the current systems be consolidated into one corporatewide ERP system and that all databases be consolidated into one database. In conjunction with this transition, core/critical processes were to be standardized and consolidated via a Six Sigma project. It was estimated that this project would cost TMZ Industries around $25 million dollars, but costs could run as high as $480 million dollars (using 6.9% of total revenue as a proxy for the total cost of ownership). Implementation might take anywhere from 14 to 24 months, conservatively. As Ryan prepared for the meeting, he could not help but wonder if these recommendations were sufficient and how they would be received by the TMZ Industries executive leadership team. (Swink, Melnyk and Hatley 2019) Assignment Questions: 1. What are the benefits from implementing a single, company-wide ERP System? 2. What challenges are likely to be encountered during implementation of a new company-wide system? 3. What would you recommend Ryan do to persuade the TMZ leadership team to act quickly? 4. What additional recommendations would you make to Ryan? Your responses to each question should be specific, complete and any assertions made by you should be backed-up by scholarly, peer-reviewed articles.