Most of the organisations tends to opt ERP system regarding their success and also prompted to switch to the effective ERP by considering the need for the favouring cutting edge solutions but ERP system has it own dark side regarding its implementation. As if the ERP system is not correctly applied then the cost and suitable damages can be enormous by which company can get suffered and tends to shut down their institution or takeover by other. The suitable article is about the failures of ERP implementation and what are suitable lessons which they have gained.
- Why ERP software is important for Nike?
- How effective designs tends to mitigate the requirements of customers?
- What are the major losses Nike face because of improper execution of ERP software?
Nike is the well known and famous company within the field of manufacturing of sports shoes for football, volleyball, athletics and many more. For this, company started producing the fitness and sports equipments for the additional product categories and due to this, the mission of company is to regularly innovate the sports product according to the global needs.
Decisions of Nike:
For this, company tends to decide the suitable forecast of demand regarding the demand of market in terms of managing the execution of supply chain management according to the needs of customers. In this context, Nike started to use SAP ERP software and also feel like they tends to get adequate data according to the need of market as by this, they leads to decide to switch their information system I2 that helps in meeting their needs. For the execution of ERP system, Nike tends to have suitable objectives that leads to enable company for rapidly meeting the needs, to make the planned manufacturing of process of within a week instead of month. It is also useful in order to make the production process more innovative by considering I2 which is more fruitful as it is useful for company in order to remove the unnecessary products within the production of company and inventory to maintain the cost that have been eliminated for the extent.
Moreover, by considering the new information system does not get effective success as the new software I2 was quite small facilitate software in order to meet the effective changes as per the need of market.
Illustration 1: Why Do Your ERP Systems Fail?, 2018
- Company also tends to meet the complete supply chain system that helps in the market identification of the suitable product due to the shortage of suitable real data which is not possible. Along with this, the planners and designers could not interpret the effective demand of market that can become the major failure reason for the ERP software.
- Along with this, the effective design tends to mitigate the needs of customers as company does not offer complete training and procurement services to their workforce in order to make the commodities more user friendly. Hence, because of the improper handling of ERP execution of company, Nike need to face loss of 100 million dollars and extra decrement of 20% market share.
- For this, company tends to invest another 5 years for the effective investment of 400 million dollars in order to overcome from the suitable problem and work effective for the overall overall software.
- In regard of this, the i2 software has also an integration problem as the software tends to be different for the business rules by which the software need effective customised in order to operate with Nike's legacy system. Because of this issue, the system prominently crashed by the overwhelmed by the tens of millions of product numbers which are same with Nike. As Nike is failed to train their employees with new system that tends to the excess production of unsought shoes.
Measures to overcome from challenges:
Along with this, Nike tend to undertake 27 order management system across the globe and also undertake highly customised link.
Furthermore, in order to gain control over the manufacturing cycle of company they need to decide suitable manufacturing system which is quite centralised regarding their planning processes.
Illustration 2: Manufacturing Process, 2020
Besides from this, after the implementation of ERP system, in 2000 the overall objective of new ERP software tends to forecast the market demand in order to meet these demands in precise manner. For this, the critical element of this project was i2 software as it was customised to help Nike to forecast the changes in market which is useful for the company to automate their main processes.
Moreover, ERP system is also beneficial undertaking the successful implementation for their manufacturing cycle, in terms of driving down for the nine to six months so that they can match their retailers in order to order their schedule. They also tends to decrease their response time for the shoe market changes and leads to develop planned production schedules of the new demand. They also tends to began the effective production of the new shoes within just one week instead of month that leads to eliminate the unwanted products and decrease inventory levels for the higher production of product in the demand.
Illustration 3: ERP Implementation Challenges: 5 Biggest Risks & Issues, 2020
Along with this, because of their experience with the ERP system, company need to know the several risk and uncertainties which is associated with it. Hence, Nike can be quite affordable to be patient with their application. Apart from this, the i2 system seems quite small because of the original ERP system as they tends to underestimate the upcoming challenges and dangers of the company by not taking much precautions which are required. In relation with effective execution, Nike tends to made suitable mistakes like they did not hire the third party integrator in order to help them for the execution of new and smooth system. They also did not want to deploy i2 part of its SAP ERP project by which Nike tends to decide to install i2 software at the beginning of 1999 as they tends to use legacy system.