University Project

Project ManagementSchmidtCO (A) ERP Automated SystemHarvard Business School

Executive summary

SchmidtCo based in Philadelphia (imports) as a master N. America for European industrial and automotive manufacturers for replacement parts. SchmidtCo manpower around 90 employees working in Philadelphia, LA, and Mexico City and was established in 1950 by John Schmidt grandfather and run by his father. John Schmidt (35-year-old) operations manager and also project manager majoring in electrical & electronic engineering graduate was managing ERP automated system working in SchmidtCo for around five years. He is experienced as electronic warfare in US Air Force and continuing to work along with his father at SchmidtCo. While managing SchmidtCo it was realized by John that inventory management system was to be adopted for effective functioning and management with the help of an automated system (Enterprise Requirements Planning, ERP).

This system was suggested to manage and control its supplies and quantities availability of automobile parts and spare parts from nuts to radiators as they had been manually managing approximately 10,000 different items distributed in different locations. SchmidtCo was ineffectively running with an obsolete 18-year-old system that also sometimes had to manage manually and the project was behind schedule for 3 months and exceeded USD 50,000. The system was of bad quality and functioning inefficiently that even caused the loss of their customer who ran out of business.

SchmidtCo hired part-time consultant supported by IT Manager who had limited information in recent technologies. Even though it was too late for changing system implemented however for urging to agreeing was roused. When the new system was decided to implement John planned for selection of new team for launching this ERP project. Out of 10 modules 5 modules (warehousing, inventory, accounting, purchasing, and sales & customer relationship management) were recognized that required critical development and further improvement for effective functioning of SchmidtCo. The main concern was to determine and system initiative whenever there is requirement for products quantity and timely reminder for making it available in order to support managing supplies in terms of quantity, price, duration, type of product, and so on.

The SchmidtCo project team spent around 3 months only in searching and selecting vendor for providing and developing this system. As a result of the survey and search result 3 companies were short listed and 1 was selected "DTech". John was only concern about implementing the system and was not into totally concentrating the possibilities after implementation like an analysis. The US based company expense was USD 400,000. The main objective of ERP system was to reduce staff and also provide excellent service for the clients. During the period of implementing the system expense up to USD 600,000 which was over projected budget and amount.

The final step was launching the system, submitting reports (IT Manager), data conversion from paper work to automated system, and execution for going live. To make further improvement in the implementation phase David Goldberg was hired (Chief Information Officer) who qualified MBA was majoring in MIT and also previously experienced VP sales in Software Company. The main purpose hiring was to continue project assigned in complemented by previous consultant who left unreliable system.

John was almost incurring expenses in such a system that he had to reinvest and re-do project from A-Z due to its inefficiency. Finally it was to select alternative short listed company and switching company assigned as supplier of the project. However the project manager was assigned to lead the project re-launch and also hire new IT manager to do technical reporting that was pending from previous IT Manager. All together they had to decide final decision.