The company has chosen to make a substantial investment in the Easy Pay Enterprise (EPE) platform that acts as an Enterprise Application Integration (EAI) layer that serves to integrate the many processes areas where accounting and human resources are required to complete internal tasks. EPE is actually an integration layer suite of applications that is tailored only to shared common corporate functions. To date, Smorgon has found this a useful integration suite for their Shared Business Services architecture. Batch-oriented integration of key system updates and financials from operations must be consolidated, analyzed and stored on the SAP R/3 instance first. The integration between EPE and the SAP R/3 instance is not considered reliable due to the strict formatting and naming convention features SAP uses and that the EPE cannot exactly match on all transactions. As a result, Smorgon continues to spend heavily on consulting and integration projects between EPE and other systems, yet is not seeing the full impact of its investments as of yet. The inaccuracies in EPE vs. SAP system data are another cause for a declining level of credibility for higher it spending within Smorgon.
Analysis - Having began in steel manufacturing and progressed into Australia's largest distributor of steel products, Smorgon today find itself with an it architecture including ERP system strategies that are more suited for manufacturing than distribution. The strategies of the company have moved on, yet the ERP systems are stuck in the manufacturing past. From a strategic perspective this is slowing the company down from better serving its customers. Excellent evidence of this transition of Smorgon from being manufacturing to distribution centric is in the decision of senior management and the board of directors to place their largest ERP instance, an SAP R/3-4.6c installation, within the Smorgon Distribution Division. The fact that both the Recycling and Reinforcing Divisions also have legacy ERP systems installed, some with little integration beyond basic transaction reporting using WebMethods adapters and connectors that may or may not scale for the transaction traffic involved in each division, and one can see how limited the it infrastructure is today. What is needed is a re-architecting of it investments including the many disparate and sporadically connected ERP systems into a demand-driven network that better serves, suppliers, buyers, customer and gives Smorgon's management team insights into how to excel on the five dimensions defined in the introduction of this case study.
Transforming Smorgon's it Strategy
Smorgon's ERP strategies need to be revolutionized, and further than that, it needs to be transformed from a disparate set of high maintenance applications into an architecture that propels the company to its strategic objectives. Figure 1 is a graphical representation of Smorgon Steel's product flow originally presented in June 2006 by Ray Horsburgh, Managing Director & CEO Smorgon Steel Group Ltd.
Figure 1: Smorgon Steels' Product Flow and Value Chain
Several key insights emerge after an analysis of this product flow. First, Smorgon is high dependent on its suppliers, and the coordination with its supply chain partners, including buyers and suppliers is absolutely essential for the company to achieve its inventory turns targets, a key performance indicator Smorgon focuses on. Second, synchronizing with customers both those through distribution and those purchasing directly, is another critical area of their business model. The role of forecasting and sales analysis applications and tools are used for providing demand visibility for Smorgon to have enough time to react to changes in demand. Third, the company actively uses business trends syndicated research and industry research to anticipate changes in demand over time. Fourth, the role of CRM systems is in providing a 360-degree view of the customer and making progress towards the strategic priority of becoming more customer-focused and increasing market share. Fifth and most critical is the reliance the company places on analytics.
Measuring Business Strategy and ERP Performance with Key Metrics
These are the measures of success or failure the company uses relative to its business goals and they are listed below. Smorgon's it department tracks the following key performance indicators regularly and they are considered the measures of value that the ERP systems in the company deliver. It must be noted that each specific ERP system of the company will report only on its own activity, the consolidation of all activity is necessary to see the truly strategic view of the company. This is a critical area for future improvement, as these metrics in essence only measure the effectiveness...
This is a delicate balance for any organization to attain, and Nucor has been able to keep the variation in production process balanced with the need to keep employees motivated while changes in their business model are implemented. Based on your recommendation for related or unrelated diversification, identify the organizational structure issues that the company would need to address to implement that diversification. With related diversification the recommendation, organizational and structural
Hence, conflicts are generated only by misunderstanding or mischief (Edwards, 2003). Although unitarism have been proven to represent old-fashioned and unrealistic ideas, many managers nowadays follow this approach. They believe in a harmony of interests between them and their employers. However, practice has proven little resemblance between the employees' desires and interests, and those of their employers. Therefore, with such an approach to the employment relationship, conflict is inevitable.
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