management information systems

University of New Brunswick Faculty of Business Administration

ADM 3713 – Management Information Systems

 

Final Examination

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ADM 3713 – Final Examination

This is a case called ENTERPRISE SYSTEM IMPLEMENTATION CHALLENGES AT DELECTABLE

FOODS UNLIMITED (DFU) Read the case carefully and there are three questions you’ll need to answer in this final exam. This exam has three sets of questions. Helpful hints in answering the final exam:

• Read the case very carefully; take your time for this to fully understand the case and the issues described.

• Outline your ideas and initial responses to the questions. Outlining your ideas will help check the logic of your thoughts.

• Since this exam is not invigilated there is nothing to prevent you from referring to other resources. If you do so, make sure to reference them, in particular providing URLs so I can check them. You don’t need to reference material provided in the course.

• Make sure you describe and discuss the relevant issues and after that, cite all relevant facts in the case to support your answer, position, or argument.

• Skip questions you can’t address immediately. • Go back to your outline, fill in the blank spaces with more ideas and insights. This will

help you to organize your thoughts before you actually start writing your answers. Start with the questions to which you know the answers. Later, go back to questions that need more time and thought.

• In general, an adequate, thorough response to each issue will be about 1 page, single spaced (therefore a minimum of 3 single spaced pages for the entire exam).

• Once you finish writing your answers, go back and review for errors in spelling, grammar, etc.

Best of luck on your final exam, and good luck in your future studies.

 

 

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ENTERPRISE SYSTEM IMPLEMENTATION CHALLENGES AT DELECTABLE

FOODS UNLIMITED (DFU) INTRODUCTION In the third quarter of 2019, Delectable Foods Unlimited (DFU), the U.S. based manufacturer of candies and complementary confectioneries, announced that its revenues rose to US$3 billion as compared to US$1.5 billion in the third quarter of 2018. The firm’s management and stakeholders were pleased with this development as DFU’s revenues and profits for the third quarter of 2018 as well as for the year of 2018 had been adversely affected due to the problems related to the firm’s enterprise systems implementation experience involving an enterprise resource planning (ERP) system and a DFU supplier portal via an extranet featuring a supplier relationship management module of a supply chain management software suite. According to CEO and Chairman of DFU Dawson Carlyle, “Unfortunately, our foray into the deployment of complementary enterprise systems introduced unexpected shipping challenges during 2018.” What started it all was DFU’s initiative to upgrade its IT infrastructure at the heart of its business operations by deploying the ERP software suite from SAP and JDEdwards’ Supplier Relationship Management module of its larger supply chain management software suite, and some of the ERP modules were implemented as per the schedule by the firm in January 2018. However, the remaining modules which were to be implemented by April 2018 were delayed and were implemented only by July 2018. This overlapped with the time when the firm starts processing big orders for the forthcoming Halloween, Thanksgiving, and Christmas seasons. Implementing Complementary Enterprise-wide Systems at DFU DFU was known for its high quality but reasonably priced candies and confectionery product and sold quite a lot of them. This meant that DFU had to have highly efficient logistics and supply chain systems supported by information technology. In the early 1990s, the spending on IT in the food and beverage industry was among the lowest. During this period, DFU, like most of its competitors, used mainframe based legacy systems used mainly for basic departmental functions like accounting, marketing, order processing, human resources, etc. In 2016, DFU’s top management approved its IT upgrade initiative called “Pressing Forward with Technology,” which sought to replace the firm’s outdated but still functioning legacy systems, to be pursued in a few years henceforth. The main goals of this initiative were to upgrade and standardize the hardware, shift to the client/server architecture environment from the existing mainframe-based environment and move to Internet-enabled technologies supported by wide area networking. By implementing the newest version of SAP’s enterprise resource planning (ERP) suite, DFU also wanted to redesign the business processes involved in fulfilling customer orders to enhance the firm’s competitiveness and raise its customer service quality levels. This SAP suite included modules for finance, purchasing, materials management, warehousing, order processing, and billing. The other major piece of the “Pressing Forward with Technology” initiative was the deployment of DFU’s first ever supplier portal via an extranet.

 

 

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This interorganizational system would use JDEdwards’ Supplier Relationship Management module of its larger supply chain management software suite. IBM Global Services was contracted to assist as the integrator of SAP’s ERP system and JDEdwards’ SRM software. According to the initial plan for this initiative, DFU would convert to the new system by April 2018, when the annual sales of candies and confectioneries were usually lower compared to levels reported for the Thanksgiving, Halloween, and Christmas seasons, usually accounting for 40 % of annual sales. By January 2018, the SAP modules on order processing, finance, and billing have been implemented. However, the SAP modules on purchasing, materials management, and warehousing, and the modules from JDEdwards were behind schedule. Though DFU planned to switch over to the new systems by April 2018, which was the lean season for its products, the modules were added only in July 2018 — three months behind schedule. From the outside, it seemed like the rollout of the enterprise systems was smooth until peculiar problems involving order fulfillment, processing, and shipping started manifesting themselves with respect to the ERP system. Problems also started cropping up with DFU supplier extranet Several consignments were shipped behind schedule, and among orders that were successfully shipped, the deliveries were incomplete. DFU had little time to respond to these problems as they emerged. The old logistics system that had been in place was pulled down, making way for the new one which was part of the new SAP system, which did not function as expected. Without data about the products in its hands, DFU was forced to call up customers to find about details of product deliveries such as actual dates when deliveries arrived, quantities delivered, specific products delivered, etc. In July 2018, when DFU chose the “Big Bang” implementation approach to enterprise system implementation, it had supplies for around eight days — this was higher than usual. DFU maintained more supplies to address any minor problems that might occur during implementation. But three weeks after the deployment of the new systems, it was clear that DFU would not be able to meet its deadlines as the shipments were delayed. As against the usual five days it took to deliver its products, DFU asked distributors for around 12 days to deliver their orders. However, DFU missed those deadlines as well. By August 2018, DFU was 15 days behind schedule in fulfilling orders. DFU was unable to send the consignments on time due to problems in order entry, processing, and fulfillment; on the other hand, the warehouses were piled up with products ready to be shipped, as the manufacturing process was running smoothly. Product inventory started to pile up and by the end of September 2019, the inventories were 25% more than the inventories during the previous year. DFU missed out on the deliveries although it had more than enough products in the warehouses. It turns out that the problem occurred due to the several informal structures within DFU. The SAP ERP software required all the data pertaining to all locations of the inventory and all other pertinent details. DFU used to ensure peak-season inflow of products from its manufacturing units by placing the products wherever the space was available — this was not always the official distribution center or the warehouse. Occasionally, DFU rented temporary warehouse

 

 

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space that belonged to another firm and sometimes, products were even stored in unused rooms in its factories. These temporary arrangements were not accounted for and identified as storage points in the SAP ERP software. The way the software worked, to fulfill customer orders, SAP ERP checks for the inventory available at each location reported in DFU’s official records. However, products stocked in the temporary storage areas indicated were not checked and entered in the SAP ERP system and thus, were not considered by the software. This occurred because of the lack of coordination between the technical personnel implementing the system and the people involved in the actual logistics operations undertaken for moving the physical products from point to point. The latter group did not update those implementing the software on the existence of these temporary storage/holding areas. Consequently, the database that held data on the product inventory levels and their locations was inaccurate and could not be relied upon in processing customer orders. Prior to the conversion of the SAP ERP system for actual production use, the IT project did all three tests — developmental, alpha, and beta tests, but used only warehouse data based on the usual official warehouse locations used for both inbound and outbound logistics. Everything seemed fine when the results of these three tests were analyzed and thus, DFU proceeded to use the SAP ERP system for its daily work and involved their end users. ISSUE 1 QUESTION: (SAP ERP SYSTEM):

(1) Analyze what happened with the DFU SAP ERP implementation piece using the SDLC conceptual framework. Where did things go wrong and which SDLC phases were involved. Briefly explain what should be accomplished in the specific SDLC phase involved. Give a detailed description and discussion of what happened in DFU. What would you have recommended to DFU to ensure a successful implementation experience?

DFU’s JDEdwards Supplier Relationship Management Software Implementation Via a Portal [NOTE: The SRM module is an important feature of the JDEdwards SCM Master Software Suite] To enhance its competitiveness in the industry, DF also sought to implement JDEdwards’ Supplier Relationship Management Software (SRM) via an extranet portal connecting DF with its suppliers. The SRM module is an added module in a standard supply chain management software (SCM) suite. This software product would create information exchanges and linkages between DF and its top or tier-1 suppliers. DF wanted to take advantage of the following features of the SRM software: 1) Purchase Order Processing Features

 

 

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While acknowledging purchase orders from DF, its top suppliers often change order information such as payment terms and carrier information. DF needs to be made aware of the changes and approve them to ensure that the changes meet DF’s business requirements. 2) Supplier Inventory Inquiry DF’s suppliers can use self-service [feature of the portal] to review a variety of inventory information, such as general item information, item quantities, and reorder points. 3) Receipt Inquiry The SRM – Receipt Inquiry program enables both suppliers and DF to review multiple receipts at once. They can review the various statuses of the receipts and use links to other programs to process the receipts further and inquire about payment information. 4) Payment Inquiry DF’s suppliers can use a self-service feature on the portal to review the payment information entered on the SAP ERP Accounts Payable system. 5) Understanding Supplier Release Schedules DF’s suppliers can also use the portal to review planned and released supplier schedules. The schedule provides suppliers with advance notice of requirements and helps suppliers to forecast DF’s future needs. DF can allow its suppliers to change delivery dates and quantities on the supplier schedule, provided that DF has set the appropriate processing option in the Supplier Schedule Revisions Program to allow the supplier to make changes. DF’s Enterprise System Deployment Challenges DFU’s IT project team informed suppliers that they may have to invest in more updated networking hardware to support the extranet portal connection with DFU. Also, on account of many newspaper and media stories of rampant hacking of corporate networking systems for industrial espionage within the industry, DFU decided to put in place robust security measures for its supplier portal extranet. DFU wanted to share the costs of securing data transmissions with participating suppliers. The security services vendor DF has in mind will provide a package of multi-layered security services that will provide a robust protection to DF and suppliers it intends to link up with. This package consists of the following services:

1) use of a virtual private network (VPN) tunnelling that would encrypt messages. 2) additional encryption using digital signatures and certificates. 3) an intrusion detection system using Cisco Systems’ “Intrusion Prevention System”

product.

The software packages involved in these three components of the security package from the vendor have very specific network hardware requirements. Only hardware with more recent networking software and with certain processing and transmission capabilities will work well with the proposed security package. DFU justified this expense by saying that it is in the best interests of both DF and the supplier to protect the data that is being exchanged and that splitting the costs is a fair arrangement to avail of the high level of protection they should strive for

 

 

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considering the security threats that are now rampant in Internet-enabled communications in the supply chain. DFU started this initiative with its top three suppliers. DF thought that piloting the extranet with these three suppliers was a good way of testing the system before rolling it out to all its 100 or so ingredient suppliers. DFU’s top supplier called Natural Sugars Inc. (NSI), a Canadian firm, provides DF with a rare natural ingredient that is a sugar substitute, has a very convincing natural sugar taste without the calories and health hazards posed by sugar substitute products like Aspertame. NSI, however, has older networking equipment which could still be used to meet the technical requirements of DF’s supplier portal which will use an extranet, according to its network administrator. NSI’s CIO Mr. David Waller didn’t want to spend more money and invest in new networking equipment because of recent overall firm budget cuts in NSI. Mr. Waller decided that the IT Department would allocate money, instead, to cover the costs of the extranet security package that DFU wanted to implement for its supplier portal. DF’s other two suppliers participating in the pilot abided by the technical and cost sharing requirements of the extranet. They are much larger firms with relatively new networking IT infrastructure and didn’t face the same issues faced by NSI. DFU’s IT project team tested this extranet initiative using the three types of tests (i.e., developmental, alpha, and beta tests) using “dummy data” and everything appeared to be in order. All three supplier firms participated in these tests prior to the conversion phase. Three months into the pilot implementation phase of the extranet, DFU experienced problems in its data exchanges with NSI. NSI reported that it made suggested changes to purchase orders initially forwarded by DFU, which DFU never acknowledged or approved. Thus, these purchases orders were not fulfilled or acted upon by NSI, resulting in unfulfilled or delayed orders altogether. DFU’s procurement department, on the other hand, reported not having received the suggested changes in order quantity, unit price, or delivery dates suggested by NSI via DFU’s supplier extranet. DFU also designed the supplier portal to give suppliers accurate information about which invoices have already been paid by DFU. This is very important in motivating suppliers to service DF promptly and in cementing a trusted long-term relationship. Suppliers will be able to view which invoices they have forwarded to DFU have been partially or fully paid. Within the three pilot months, however, NSI reported inaccurate data about which invoices have already been paid by DFU. The amounts paid shown on the extranet do not match the direct deposit amounts received by NSI’s bank (i.e., NSI receive payments from DF via bank-to-bank transfers).

 

 

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ISSUE 2 QUESTION (JDEdwards Supplier Relationship Management Module of its Supply Chain Management SYSTEM):

(1) Analyze what happened with the DFU’s implementation of its supplier portal via the extranet specifically with its Canadian supplier, Natural Sugars, Inc., using the SDLC conceptual framework. Where did things go wrong and which SDLC phases were involved. Briefly explain what should be accomplished in the specific SDLC phase involved. Give a detailed description and discussion of what happened in DFU. What would you have recommended to DFU to ensure a successful implementation experience with NSI?

Security Issues at DFU: DFU’s CEO Carlyle sent a memo to DFU Security Vice President Shirley Dawson and Information Technology (IT) Vice President Mary Benning to address the firm’s security issues when the onslaught of daily news on hacking attempts on many firms using more and more effective methods. Carlyle heard about the use of cold sites versus hot sites and would like the staffs of Dawson and Benning to collaborate on which of these two options would be best for DFU. The Security and IT staffs (i.e., these are two separate offices and staffs at DFU) met a number of times and decided that the two companies they would consider, after reviewing all possible service providers of cold and hot sites within a certain geographic area, to be the two competing firms: 1) Centrilogic, and 2) OngoingOperations. Both firms are well known in the industry and have excellent reputations. Their pricing schemes for both cold and hot backup sites are not so dissimilar, but the services prices are so high that signing up for a long-term contract with either firm would cause a serious dent on the budgets of both the Security and IT units. This is a budgetary disruption that either staff did not welcome as they had so much planned that would require financial support. The collaborating Security and IT team members also disagreed heavily over their perceptions of the quality of the security staff experts in both firms. Their disagreements went on for three months and no final decision was reached, and then, on February 2020, a security event took place — their data center in their headquarter office in Portland, Oregon caught fire because of overheating database rack servers and the electrical system blew up as the software managing the electrical system malfunctioned. The data center building was not demolished from the fire, but about one-third of the database rack servers were destroyed. These servers housed BOTH original and backup master copies of certain customer, order, product, and marketing files critical to DFU. This was considered a disaster by many in DFU because the lack of data halted some of their transaction processing systems from running. The delay in decision making by the joint Security and IT team also added great stresses to an already serious situation.

 

 

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ISSUE 3 QUESTIONS (Security Issues at DFU): (1) Now that the fire took place and destroyed part of the DFU data center in their

headquarter office, what other options are available to DFU that you would recommend?

(2) What would you have recommended to DFU to ensure a secure future with respect to their IT assets?

[NOTE: This case study is about a fictional firm called Delectable Foods Unlimited. The details of the ERP implementation section of the case are based on an actual firm’s experience. To protect the privacy of that real firm, a fictional firm name is used here. Also, fictional details were added to the case to meet the objectives of this final exam.]

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