Smidtco Case Analysis

For Office Use

Grade

Communication for Managers

Individual Case Based Written Assignment 1

Executive Summary

In order to manage their large inventory, SchmidtCo decided to upgrade their old information system to a more efficient one. Their project to implement a new Information System was running behind schedule and over budget. The reasons behind the debacle were an inefficient IT Manager at SchmidtCo and poor service provided by the vendor DTech. However, they decided to stick with DTech but with a new Manager and consultants. SchmidtCo also decided to hire a full-time Project Manager and a new IT Manager in its team. This would lead to a fresh approach and minimization of further costs.

Situation Analysis

John Schmidt was the Operations Manager of SchmidtCo, a Philadelphia – based family owned automobile parts distribution company established in 1950. The company had a net worth of $ 40 Million. SchmidtCo shipped 20,000,000 pieces of equipments a year and distributed nearly 10000 different items from 21 manufacturers over 21 destinations. In order to make their complex distribution system more efficient, SchmidtCo was updating their obsolete information system with a newer effective system and server. But, the project was facing serious problems. It was already 3 months behind schedule and $50,000 over budget. The quality of the upgrade was far below expectations.

John had continuously strived to improve the outdated inventory system of SchmidtCo. But, even after numerous enhancements with the help of an independent consultant (who had quit) and an IT manager, SchmidtCo realized that the old system had severe problems. In order to fix these problems, John assembled a team of eight managers to determine the changes needed. The team decided to implement an Enterprise Requirements Planning system which covers all important aspects of a company. For ScmidtCo, the important modules were Warehousing, Inventory, Accounting, Customer Relationship etc. After careful deliberations, they selected the DTech system because of its superior functionality in warehouse and inventory management. The system cost about $400,000 including installation. Even with extensive planning and training, it was clear within 3 months of the project that all was not well. The company had already spent $600,000 on various aspects. The problems included inefficient DTech consultants, lack of time for John, an inept IT Manager who was unable to convert the data from the old system to DTech and setup reports and an unreliable old system.

SchmidtCo had tried several remedies like hiring David Goldberg, an acquaintance of John to help with the implementation process. DTech also changed a few of its key personnel. John had several options like hiring a full-time project manager and a new IT Manager. He also had the option of dumping DTech altogether and switching vendors. John was in a big dilemma as it was one of the biggest investments of his company.

Problem Statement

Inefficient implementation of the new Information System.

Objectives

i) Efficiently managing the high-volume and complex inventory.

ii) Minimizing further expenditure on the IT System updating process.

iii) Efficient implementation of the ERP System.

Options

i) Hiring own full-time project manager.

ii) Hiring new IT Manager.

iii) Firing DTech altogether and turning to the second vendor.

iv) Continuing with DTech with the new consultants and Project Manager.

Evaluation of Options

i) Hiring full-time project manager would give John Schmidt more time to focus on the numerous problems that had been plaguing the project. A full – time project manager whose sole focus is on improving the update project would also go a long way in reducing errors and making the implementation more efficient. A full – time project manager who has experience in IT Upgrade projects would streamline the whole project. But, the new project manager would have to be paid a hefty salary.

ii) The old IT Manager was inept at converting the data from the legacy system to DTech as well as preparing reports for the updating process. A new, more efficient IT manager who could do the above-mentioned tasks effectively would be a big help to the consultants of DTech and it would also reduce the