Essay on Electronic Resource Planning in Volkswagen

Volkswagen is one of the worlds leading manufacturer of automobiles whose headquarter is in Wolfsburg Germany. According to Forbes, the company was named in the top 25 largest companies in the world in the years 2014.Volkswagen runs a lot of branches worldwide that facilitates its operations on an international market. The branches are mandated with manufacturing and assembling of vehicles for the local market (Wiese, 2009). Currently, Volkswagen is focusing on localizing various activities that aim at meeting the demand of the local market that it has ventured in worldwide. Since the company operates a lot of branches globally, VW has focused on coordinating some its activities by making sure that they align with the companies set goals and objectives (Clemens, n.d.).

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Electronic resource planning (ERP) is the process which a company manages and integrates essential parts of its business. When an organization integrates ERP system, areas such as inventory management, planning, purchasing finance and human resource are all integrated (Monk & Wagner, 2012). The main reason why the company should integrate all its activities to work as one is to increase the value of every activity and department, and this enhances the need to provide a system that provides an integrated view of every operation carried out within an organization (Resources, 2013). The overall objective of the project was to enable the company to deal with the challenges faced in service delivery of products to the final customer. ERP ensured that applications, analytical tools, and critical data are all available to the employees for them to carry out their task effectively (Wagner & Monk, 2008). The project helped in the optimization of human resource as the ERP system takes into aspect every activity involved in human resources including the allocation of responsibilities. The capability of the workforce was maximized by supporting flexibility, innovation, and growth. Volkswagen was able to provide and increase compliance in single payment and invoices (Ray, 2011).

Volkswagen run various branches globally, and each branch serves different markets. The company was tasked with coordinating the shipments of various spare parts to these factories so as to enhance work continuity. However, the company faced a lot challenges in coordinating various activities both at the companys headquarter and overseas (Carlos, 2008). For instance, the companys main production plant which is located in Wolfsburg provides more than 9000 parts for every car model, but coordination with its subsidiary was poor, and some and the company faced supply chain challenges in transporting this component to various factories. The production plant also carries out maintenance of a vehicle, communication components designing of components and other optimal enhancements. VW experienced managerial delays as employees working in this plant used to analyze data manually before they enter them into Excel.

Since Volkswagen has a substantial requirement of reporting various activities internally, keying of data manually was a remarkable job, but was time-consuming (Weele, 2009). Apart from being time-consuming, this process did not meet the companys requirement. For instance, shorter development cycle frequently required new reports that staffs needed to facilitate operation efficiency. Additionally, various departments such as finance, supply chain, and store department were not working closely, and the company found out that there was problematic redundancies. For instance, there was the surplus in production and delayed delivery of components (Skjott-Larsen, 2007). The companys main objective was not a uniform data basis but wanted to ensure that information was distributed in a flexible and mainly in an automated way. With the implementation of the process, the company also wanted to streamline its collaboration with partners and reduce supply chain related costs. Notably, VW wanted to integrate all data from different networks of authorized dealership with the help of a single order management system. The implementation of ERP could provide partners with a complete and transparent process of order fulfillment, and this will have a positive impact on customer satisfactory as goods will be delivered on time.

The company and various stakeholders settled on implementing ERP which would take two to three years to be effective. However, the implementation meant that some the business process needed to change drastically and there was going to be pain involved (Madu & Kuei, 2005). The process of implementation was going to be slow as it was not just software implementation rather an overhaul of organization activities. A team of fifty senior IT officers was formed to carry out ERP implementation. The team was mandated with defining a set of common process for each division. More categorically, each department, such as accounting, sales, manufacturing, inventory and stores would have to do away with the manual way of doing things.

The implementation team spends more than one year trying to review every piece of data in every division to come up with a common data design in every department across the entire business. For instance, one component would be coded as 234 in every division so that ERP system could be customized with the uniform process and data, and this was to happen to all components. The project team translated most of the companys activities that were to be automated into specific deliverables (Cleland & Ireland, 2006). Every division manager and employees were involved when the project team was reviewing each piece of data in every division. The process involved change management plan to prepare users to the system to avoid resistance, and to achieve this, a technical team was put in place to provide education prior the implementation of the system (Bruch & Vinnichenko, 2007). The project implementation team involved expertise from sap team while coming up modules that were needed to be incorporated into the system to make sure that every unit integrates easily with each other.

Critically, beginning from the quantitative perspective, Volkswagen integrating ERP system has made them achieve inventory reduction of 30 to 40%. The company is now delivering improved management of their raw materials, work in progress and even finished goods. Statistically, incorporating ERP system in Volkswagen Company has led to 15% incremental improvement in the company, with a future focus on 20% growth in the next two years (Heding, Knudtzen, & Bjerre, 2008). ERP system has indicated positive purchase of materials and components and predictable lead time. Quantitatively, Volkswagen Company has enhanced their ability to produce error-free products, improving returns on receivable by five percent hence leading to important improvement in cash flow. Qualitatively, through the adoption of enterprise resource planning, Volkswagen has been managing the report through QuickBooks through just exporting them into excel and then coming up with a single new report just to achieve the information that is required (Heizer & Render, 2001).

Reference

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