For Office Use:

Grade

Communication For Managers

Individual Case Based Written Assignment 1

Case Analysis Report on

SchmidtCo (A)
Submitted By:

Name:

Debadatta Ratha

Roll No:
Section:

151222
B

Batch: MBA - FT (2015-2017)

Submitted To:

Prof. Reena Shah

Institute of Management, Nirma University

Executive Summary
The report is based on the problems faced by SchmidtCo, a importing and distribution company
for the automotive parts from Europe in changing over from the old information system to an
integrated ERP system. The expanding product line and the incapability of the IT manager and
the instability of the old system made matter worse. The objectives completing the data
conversion & budget overrun, conversion from old system to new ERP system are laid out and
potential alternatives such as recruiting new IT manager, appointing full time PM, putting
additional consultants were discussed. After evaluation of options it was decided to recruit a new
IT manager.
Word Count: 106

Situation Analysis
SchmidtCo a Philadelphia based importing company which acted as the master distributor for
European Industrial and Automotive Manufacturers in North America. Established in 1950 a
$40million family owned company, SchmidtCo was spread across Philadelphia, Los Angeles &
Mexico City with an employee strength of 90 it distributed 10,000 SKU and shipped 20,000,000
units annually. John Schmidt (engineer and ex US Air Force) the Operation Manager of SchmidtCo
was at the helm of the operations. The old inventory management system was inadequate and
with the original vendor of the system going out of business SchmidtCo was left out with
independent consultants in dealing with the issues of the old inventory management system.
Recognizing the expanding product line up and being aware of the limitation of the inventory
management system of SchmidtCo it was John who decided to set up the new ERP system for the
company. Aided by the 8 membered Selection Team John decided to implement the ERP system
for SchmidtCo. Integrating the Warehousing, Inventory, Accounting, Purchasing, Sales and CRM
and costing (Exhibit 2) at $400,000 the ERP system implementation with a down payment of
$200,000 was awarded to DTech a European company competing with the runner up ERP vendor.
John was having high hopes from the system and was expecting an integrated and automated
system which would improve the customer service level and reduce the overall inventory and the
staff. The changeover in the information system, the process of replacing the 18 year old obsolete
system and putting up the new ERP system had run into delay and cost overrun by $50,000.
SchmidtCo had put a 10 member Implementation in December to work with the 3 membered
team from D Tech to implement the ERP system. The IT manager of SchmidtCo playing a pivotal
role was incapable of the necessary data conversion and handling the old system which had
become unstable & unreliable after it was abandoned by the independent consultant. David
Goldberg an experienced IT personnel had prior knowledge of the issues with SchmidtCo and had
indicated his expression to be the Chief Information Officer. Being a family owned company
Johns father was already reluctant to add to the head count of the company. But the current
state of affairs at SchmidtCo had put John in a difficult situation.
Contemplating the implications of the wrong decisions John was in a fix and couldnt decide on
what to do next.

Problem Identification
1. Incapability in handling the issues of the old inventory software system.
2. Delay in conversion from old system to ERP.
Objectives
1. Completing the conversion of data & improving the stability & reliability of the old system
within 45 days.
2. Limiting the head count & the budget cost overrun to $85,000 and time overrun to 60
days.
3. Completing the change over from the old inventory software to the ERP in 60days.
Options
1.
2.
3.
4.

Recruiting a new IT manager

Recruiting David Goldberg as full time Project Manager
Putting additional consultants for old system handling
Dumping D Tech for the runner up ERP vendor

Option Evaluation
1. Recruiting a new IT manager
Recruiting a new IT manager would help speed up the data conversion process. The new
manager will ensure the timely conversion of data from the old system to the ERP system
and will also resolve the stability & reliability issues of the old system. He will also design
the reports & install the hardware for the ERP system. The new IT manager might find it
difficult dealing with the old system. This will increase the employee head count.
2. Recruiting David Goldberg as full time Project Manager
Appointing David Goldberg as a full time Project Manager (PM) for the conversion of the
information system. David has the experience and the insight about the old system and is
a technical expert in IT. He is motivated and interested for the job. Appointing a full time
PM will still need recruiting a new IT manager and in turn will increase the head count
and the expenses of SchmidtCo.
3. Putting additional consultants for old system handling
Hiring external consultants for the data conversion & infrastructure handling of the old
system. External consultants are the ex-employees of the old system vendor and are well
versed with old system. They are temporary members and will not increase the head
count of SchmidtCo. The expenses incurred in hiring of the consultants will increase.

4. Dumping D Tech for the runner up ERP vendor

Replacing DTech for the runner up ERP vendor for the ERP conversion. DTech is new to
the US market whereas the runner up ERP vendor has a several hundred systems installed
in US and is a native company. Switching the vendors will lead to a loss of 3 months of
time and $200,000 of down payment money invested so far.
Decision
Recruiting a new IT manager is the most viable options(Exhibit 1). The IT manager plays
an important role in the changeover from the old inventory software to the new ERP system. He
will ensure the conversion of data and installation of new hardware. Even though it will slightly
increase the head count and the expenses of the company it will be outweighed by the outcome.
Action Plan
1.
2.
3.
4.
5.
6.
7.

Recruiting a new IT manager

Resolve the stability and reliability issues of the old system
Conversion of data from the old system to the new ERP system
Installing the new hardware for the ERP system
Designing outcome reports for the ERP system
Conducting Conference Room Pilot with real data
Setting the ERP system live

Contingency Plan
Hiring of additional external consultants for old system handling (Exhibit 1). Additional
consultants are acquainted with the old system & they are temporary so there is no
increase in headcount but a marginal increase in cost.
Word Count: 973

Exhsibit
Exhibit 1: OPTION-OBJECTIVE MATRIX
Option/ objective

Data Conversation & Limiting

Budget Change over
System Stability
Cost & Head Count to ERP

Recruiting new IT manager

Recruiting David Goldberg as
full time PM
Putting additional consultants
for old system handling
Dumping D Tech for the
runner up ERP vendor

Exhibit 2: ERP SYSTEM- INTEGRATION

The ERP system integrated the following verticals of the SchmidtCo.

Warehousing Controls shipping, receiving and storage functions (Offers a paperless

environment and transaction entry by RFID barcode scanners.)
Inventory: Controls all inventory transactions
Accounting: Gathers all the information critical to accounting from other modules.
Purchasing: Generates Purchase orders, tracks cases, delivery, forecasting of sales.
Sales and CRM: Tracking open sales orders, shipments, transportation.

Exhibit 3: BUDGET
ERP Implementation Process & change over from old system
Duration: 6 months
Cost of ERP system including installation -

$400,000

Down payment paid Consultants Cost of hardware -

$200,000
$120,000
$380,000

Budget Overrun -

$50,000

UNDERTAKING

To Whom It May Concern:

I, Debadatta Ratha hereby declare that this assignment is my original work and is not copied from
anyone/anywhere. If found similar to other sources, I shall take complete responsibility of the
action taken, thereof by, CFM Team.

Signature
Name:

Debadatta Ratha

Roll No.:

151222

Section:

Batch:

MBA FT (2015 2017)

Date:

21st August 2015