Keda Case Analysis

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Keda Case Analysis

1) Value Chain

PRIMARY
PRIMARY
SUPPORT
SUPPORT

Organization– ERP supports tightly knit collaboration among different departments. Departmental boundaries are replaced by streamline data flows & integrated business processes.

Human Resources- Management, department heads, IT staff and users worked as a team. Keda provided high customization across increasingly diverse product lines to meet client needs.

Technology- Technology is integrated to support all primary activities. ERP enables flow of information across department, so timely and strategic decisions are made.

Purchasing – Technology enabled right estimates and timely access of raw materials. Stocking could be limited

Service
Customer
Service and repair of parts
Service
Customer
Service and repair of parts
Outbound
IT helped keep track of delivery of customized products and faster financial reconciliation Outbound
IT helped keep track of delivery of customized products and faster financial reconciliation Inbound
ERP
enabled
effective
inventory
management Inventory
could be
received in
timely
manner

Inbound
ERP
enabled
effective
inventory
management Inventory
could be
received in
timely
manner

Marketing & Sales
Low percentage of unsold inventory, improved market responsiveness, costing estimates Marketing & Sales
Low percentage of unsold inventory, improved market responsiveness, costing estimates Operations
Keda has a broad offering spanning industrial machinery for ceramics, stone processing, building Materials & energy resource management
Operations
Keda has a broad offering spanning industrial machinery for ceramics, stone processing, building Materials & energy resource management

2) Reasons for Keda to embark on an ERP implementation project

1) Disconnected business units/Lack of Integration- Disconnected business units duplicated identical processing tasks, resulting in redundancy. Managers could not make timely, well-informed, holistic business decisions as very little information flowed between departments. Lack of integration prevented leaders from acting strategically. Main task was to provide the needed information for every decision maker at every step of the way in the decision making process. Break departmental boundaries and replace them with streamlined data flows and integrated business processes.

2) Pressure from Government - ERP implementation was a reaction to government’s call. There was a pressure and incentives from Chinese government to promote computerization in corporations in an effort to catch up with the foreign firms.

3) Inventory Management-  Keda’s low volume and high customization across an increasingly diverse product line made it difficult to keep track of the many unique, individual parts.

4) Cost Management - Mess in material management made cost of a product unclear and costing was based on experience. Profit or loss from sale of product was unclear due to mess in material management. Thus pricing of products was difficult.

5) Opportunity Cost - Keda struggled to meet demand. It produced much below the market demand. Suboptimal use of resources represented a significant opportunity cost for the company. Reusable materials were scrapped and precious machine time was often wasted.

6) MRP II system - Keda had opened multiple pants. The existing MRP II system could not support multi-plant operations.

3) Critical Success factors and the structures in place

‘Top management support, key users involvement and clear roles and responsibilities between IT, consultants and staff were critical success factors’ and central to the initiative’s success. The implementation team was built taking into account the roles and responsibilities of all the employees of Keda. Top management were responsible for critical decisions, key users supplied the actual...
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