Implementing enterprise resource planning (ERP)

systems in small and midsize manufacturing firms

Joseph R. Muscatello
Infiniti Systems Group, Brecksville, Ohio, USA

Michael H. Small
Department of Management, University of the West Indies, Bridgetown, Barbados, and

Injazz J. Chen
Department of Operations Management and Business Statistics,
College of Business Administration, Cleveland State University,
Cleveland, Ohio, USA
International Journal of Operations & Production Management Vol 23 No. 8, 2003
Presentation by ;

Habil Olaka , # 602546

Introduction
successful implementation ->strategic,
operational & information related benefits, or
else financial doom
Most information on success & failures based on
large firms (inv. >$100m), but ERP vendors now
turning to SMEs
Research gap
Research multiple case study approach to
investigate ERP implementation in SME
manufacturing firms in US based on field studies
of 4 projects

Introduction (contd)
SMEs not rushing into ERP installation because:
Failure rate high (conservatively 40% partial, 20% total failure)
Lack of resource hence piecemeal approach
Low IS staff levels for the rigorous and extensive IT training and development

ERP integrates all functions, modules share & transfer info, centralized
in a single relational database accessible by all modules, eliminating
multiple entry of same data
Improves customer satisfaction
Reduce inventory costs, improve efficiency, increase profitability
Reducing manufacturing lead times

Some ERP implementation were disasters:

Fox Meyer Drug ($5 bio company) filed for bankruptcy-incorrect orders led to
excess shipments
Dell Computer scrapped the ERP system for lack of flexibility
Managerial issues planning to implementation main cause

Case Studies
Case study methodology ideal for improving
conceptual and descriptive understanding of
complex phenomena, observe causality.
Longitudinal methodology and selects four
manufacturing facilities and collected data
using:
direct observation, historical records, attend
project-team meetings, interviews etc.

ERP Implementation process

Planning activities

Strategic objectives and top management involvement

(HQ driven, executive sponsor at VP level) A, B, C, D
Reengineering efforts
ES needs analysis (in-house vs. independent consultant)
ERP profiles of the companies (A,B,C relative
sophisticated, D basic accounting /finance/production.

Justification and selection activities

Economic and strategic goals (savings inventory
holding costs, customer service level, head )
Economic and strategic justification (investment
appraisal techniques-pay back period, ROI, ROA,
volumes too high for current system etc.)

ERP Implementation Process

(contd)
Installation activities
Education and training requirements
(reassignment /replacement, hiring, training)
Project monitoring and reporting (team reports,
meetings, limit time and cost overuns)
Overall project performance (full integration so
no entry of data twice, on-time delivery, exec. Mgt
involvement)

Discussion
Executive management commitmentcommitted sponsor chosen, C&D had them
leave.
Link ERP investment to strategic planning
Reengineering before ERP selection
Needs assessment extended to cover
hardware requirements, mgt and operator
education and skills audit
Executive and divisional mgt develop
effective communication and team building
skills, for these multi-layered project teams

Conclusion
The 4 cases diverse enough to illustrate common
traits for successful ERP implementation, more
detailed studies needed to develop theory in area.
Challenges experienced similar to those in
manufacturing technologies e.g. MRP II & CIM and
the successful firms concentrated on areas identified
for success in MRP II & CIM . =>common traits in
implementation of modern technologies, especially
human factor related activities
Future studies to focus on if there is 1-to-1 matching
of successful implementation actions across all
integrated technology adoptions

References
39 references of which 8 text books
Journal articles reasonably recent at most 5
year old i.e. 1998

critique
seems to generalize observations which is
based on a non-representative sample
Sample selection may be biased and appear
based on authors knowledge of
implementation challenges at firms- should
have considered geographical distribution
Not typical SMEs as they were divisions of
larger companies

Findings (continued)