Operations Management case



1.   There are many different software products for forecasting. Find and visit the Web sites of two companies and describe the different tools used. Provide a sample screen capture that illustrates the graphical user interface. (Hint: search on the phrase: “operations forecast software”.)

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E      ERP in Mergers and Acquisitions


     Enterprise resource planning can offer a company many benefits over traditional transaction processing approaches. By integrating a firm’s TPS functions into a unified system, companies can process basic transactions faster, more efficiently, and at a lower cost in most cases. In addition, because many ERP packages include “best practices” approaches to running a business, the ERP approach can help a company improve its overall approach to doing business. ERP implementations, however, can be costly and time consuming.




Lyondell Chemical is a Houston-based company with 9,000 employees and annual revenues of $8 billion. From 1995 to 1997, Lyondell implemented SAP R/3. After the ERP system was operational in 1997, some believed that only maintenance of the system would be required in the future. But this forecast turned out not to be the case. Like other companies, Lyondell is making acquisitions in its effort to grow. Because of the increased scope of the company, the result was two additional SAP implementations in 1999. According to Robert Tolbert, Lyondell’s chief information officer, “If you’re merging supply-chain organizations to be efficient, you need to be on the same system to share data.” Lyondell decided to implement SAP R/3 in each of the merged companies. As a result, the costs and time required to implement an ERP system had to be incurred several times, and it is likely that Lyondell will continue to have ERP implementation costs as it continues to acquire other companies. Fortunately, Lyondell was able to learn how to implement  the ERP systems  more easily and efficiently. “After the first couple of times, you have some in-house experience. So the third time you don’t need as many consultants,” says CIO Tolbert.




L   Lyondell is not alone. Other companies have also experienced multiple ERP implementations. Celestia, for example, used one ERP program in Canada and another ERP program in its Asian operations. The company is an IBM spin-off based in Toronto with annual revenues of $3.8 billion. Celestia is now considering the possibility of standardizing on a single ERP system. As with Lyondell, this would require another ERP implementation in either Canada or Asia, with all the accompanying costs and time requirements.




    Discussion Questions


1.     What are the advantages and disadvantages of implementing ERP in a merger or acquisition?


2.     What are some of the disadvantages?


3.     How would you minimize the cost of implementing multiple ERP systems over time?


4.     Assume that you are the chief information officer of Celestia. What factors would you consider in deciding which ERP implementation to use in both Canada and Asia? How would you decide which system to use worldwide? 


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