ITAM Case Study

Vandelay Industries, Inc

Group-3

Angsuman Bhanjdeo-
12A Abhay Singh-3A

Ishan Chandra Atri-22A Abhishek Deshpande-

4A

Shadan Mahtab-48A

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 Vandelay Industry-About the Company

Company
Phases in the Company
Background
Severe competition from 3 strong foreign competitor
Founded in Minnesota during World War II. Cheaper machines
Mid 1980s Machines with lesser quality and lesser features
(Loss
Period)
Manufactured and distributed industrial process
equipment used in production of rubber and latex. Lean production, Closure of Three plants
Rationalization of product line
Change Introduction of simpler and cheap machines
US $8 billion in terms of revenues and had 30000 Layoff reduced strength to 20,000
Phase
employees at its peak.

Give higher priority to manufacturing process

Profitability Give higher priority to order fulfillment
Phase
(Mid 1990s)
Known for design quality, innovative
engineering and feature rich products
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 Vandelay Industry-Case Summary

Chain of Events that lead to adoption of SAP

R/3
Vandelay Industries, is a global, multi-billion Diverse MRP systems used
Each manufacturing facility had purchased
dollar corporation that manufactured were integrated in to the
its own manufacturing resource planning
industrial rubber and latex process corporate financial system but
(MRP) software and customized both their
equipment, it was being run on outdated, that level of integration was
software programs and business processes
fragmented, manufacturing and order not sufficient to achieve the set
specifically to their own plants needs
fulfillment systems organizational goals

The success of the new system was

dependent on Deloitte and Vandelay Vandelay decided to
Market conditions changed drastically in the
executive management making the right purchase SAP R/3
1980s.New,cheaper competitors emerged in the industry
decisions about the level of Enterprise Resource
and forced Vandelay executive management to realize that
configurations allowed by the various System (ERP) and
they had to seek more efficient, streamlined, manufacturing
user groups as well as identifying what contract with Deloitte
systems and processes to be able to drive down costs and
level of BPR, if any, would be needed to to implement the
price their products more competitively to survive
support the new solution new system.

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 Past Information System Status at Vandelay
Issues Faced due to
fragmented Systems

Scheduling: Because of no connectivity between different MRP across plants, the manufacturing plant production plan had to be
manually entered into the assembly plant systems. It had be done manually each week such that no other inputs were allowed
Each plant had during the week

its own
Forecasting & planning: Forecasting was done in form of monthly buckets while the customer orders requested delivery
MRP within a week. If request do not line up with months production plan, late shipments resulted

Specialized
software for Order management: Orders taken manually and sent through fax and hence keyed into sites order entry system

Forecasting
Capacity Human resource: When employee transferred from one location to other, whole data need to be manually entered at new
location
planning
Human resource Financial and accounting: manufacturing S/W used were not linked to financial package, hence info. like labor hours charged
management per job etc. had to be entered manually in both systems.

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 SAP R/3 Application Modules
Workflow (WF)
The WF application
module links the
integrated SAP R/3
application modules with
cross-application
technologies, tools, and
service
Quality Management
(QM)
The QM application
module is a quality control
and information system
supporting quality
planning, inspection, and
control for manufacturing
and procurement
Industry Solution (IS)
The Industry Solutions
combine the SAP R/3
application modules and
additional industry-
specific functionality
Production Planning
(PP)
The PP application
module is used to plan
and control the
manufacturing activities of
a company
Human Resources Plant Maintenance
(HR) (PM)
The HR application module The PM application
is a complete integrated module supports the
system for supporting the planning, processing, and
planning and control of completion of plant
personnel activities maintenance tasks
Materials
Sales and Distribution
Management (MM)
(SD)
The MM application
The SD application module
module supports the
helps to optimize all the
procurement and
tasks and activities carried
inventory functions
out in sales, delivery, and
occurring in day-to-day
billing
business operations
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 Reasons for Success of SAP R/3

Modularity,
Client Server Functionality and
technology Integration
Marketing Strategy
Included financials, Partnership with most
order management, large consulting firms
Large firms moved manufacturing, Marketed as broader
from Mainframe to logistics, and HR business strategy
Client-Server Integrated all the
architecture R/3 was modules
made for Client Server Centralized database
architecture accessible by all the
modules

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 R/3 Implementation at Vandelay
Timelines, Effort Required and Implementation Costs
The Vandelay Projects
implementation would
require 18 months
R/3 software to be
implemented at Vandelay 's
8 mfg. sites, 4 order entry
locations and at corporate
headquarters in Minnesota
Plant installations would
require a lengthy
preparation period to align
ops with the new business
practices.
Two-thirds of employees
would need training on
how to use new system
To meet companys specific requirement,
settings of R/3 configuration tables were
R/3 Configuration and Customization for
changed.
8000 tables of R/3 define the looks and
working of transaction screen.
Full time effort of 50 people including consultants(
Table configuration activity had to be
process re-designers and SAP specialists) and replicated for all relevant processes which
employees needed time and expertise, which created
Part time involvement of many employee at each dependency on a few people who were experts
site. in it.
Vandelay
R/3 system could only satisfy 80-95% of a large
Initially, the project team would focus about 80% companys specific business requirements.
of its effort on designing the to be process model Remaining functionalities were obtained in four
of the organization, and 20% on issues related to ways
system implementation. 1.Interfacing R/3 to existing legacy system.
2.Interfacing R/3 to other packaged software
In the later phases, during the activities of system
serving as point solution for specific tasks.
configuration, testing, and delivery, the emphasis 3.Developing custom software that extends R/3s
would be reversed: 80% concentration on SAP functionalities and was accessed through standard
implementation and 20% on process design. application program interface.
4.Modifying the R/3 source code directly.
$20 million, including hardware, software,
consulting fees, and salaries.
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 Team Structure at Vandelay
Two team for managing the project
Steering committee
Project team
Steering Committee, 8 member team,
consisting of Division VPs. The team would
meet monthly. This team would address issues
related to Business Strategy like sequence of
site installations, planned change in mfg.
strategy.
Project team, 20 member team, consisting of
operations employees, e.g. planner/buyers,
financial accountants. This team would address
implementation specifics.
According to Kramer, participants for
the project team could be selected on any
of the following basis:
Present a list of required skills and
characteristics for team members to the
senior-level management and ask them
to nominate people
Mandate that the team contain at least
one representative from each of
Vandelays implementation sites
around the world
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 Possible challenges that could be faced

Business Process Reengineering-Business processes and enterprise resource planning systems

are strongly related to each other. There are two approaches to ERP implementation the first
approach, all four dimensions of organization which are strategy, process, people and technology
are explored without constraints. In the second approach, technology-enabled change, primary
technology is selected first and influence the other three dimensions of strategy, people and
processes which is the case in Vandelay Industries.

Change Management: This challenge has several components like Team Selection, the trade-off
between centralization and autonomy, the decision between choosing standardization vs
customization, the major challenge to be faced by the organization in the implementation was the
tight schedule and the proposed budget.

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 Advantages of Implementing ERP at
Vandelay Industries

The integrated environment would allow to see the entire company as

a single unit

The new system would replace the existing legacy systems which The new implementation would provide an opportunity
are bulky and difficult to maintain to redesign the business process in an efficient
manner

Would lead to reduction in lead time as and better control, of the

companys entire pool of information

The organisational structure and HR policies and

The cost of maintaining the data would reduce significantly as all the processes could also be revamped in the new system
data would be centralized

Increase in efficiency and productivity by freeing employees from

performing time-consuming manual work
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THANK YOU!!!

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