GM forced to take emergency measures

The locomotive unit of General Motors was forced to launch an emergency turnaround strategy after an SAP R/3 implementation...

The locomotive unit of General Motors was forced to launch an emergency turnaround strategy after an SAP R/3 implementation brought its spare parts business to a virtual standstill.

The company instigated the emergency rescue plan last July, some six months after the software went live. However, even today order backlogs and fulfilment cycle times are not at levels that fully meet customer demands.

The SAP software had to be re-configured, flushed and repopulated with clean data, said Mike Duncan, director of worldwide aftermarket sales and development. The GM subsidiary hired a second consulting firm to help fix the enterprise resource platform (ERP) and supply chain management (SCM) system after its first integrator completed the initial rollout.

The problems started when the Locomotive Group went live with R/3 in January 2001. The plan was to make aftermarket operations more efficient by replacing legacy mainframe systems with R/3 modules that could handle parts distribution, order entry, procurement and financial reporting, explained David Scott, the unit's executive director.

Scott said there were no problems with R/3 itself, but the applications were not properly configured to meet GM's needs. As a result, the aftermarket department couldn't accurately forecast demand or ensure that it had the right mix of parts inventories on hand.

"Our business processes were largely arrested by what happened," Scott said. "We spent a lot of money and expected to get something for it, and got something else instead. It was very disappointing."

The company declined to identify the first consulting firm that worked on the project, nor would it disclose the cost of the project.

Duncan said the materials supply and forecasting modules in the ERP system were especially troublesome. The way they were configured did not reflect the complexity of the distribution processes the Locomotive Group uses to supply parts to customers, he said. In addition, some legacy data was not adequately reformatted to work within the SAP applications.

The Locomotive Group brought in Technology Solutions to help reconfigure the ERP system.

General Motors is not the only company to suffer at the hands of an SAP failure. Lego, Hershey's, Bang & Oulfsen, Volkswagon and Whirlpool have all either abandoned or suffered problems with R/3 implementations.

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