Levi Strauss & Co. is the large U.S. clothing company which was founded in San Francisco in 1853 by Levi Strauss, the immigrant from Bavaria. Today, it is one of the most popular clothing brands in the world which produces the high quality denim jeans. Levi Strauss & Co. is one of the leaders in the apparel industry, and this brand is present in more than 100 countries all over the world. The company is famous for the significant percentage of sales round the globe because of the brand’s reputation and recognition among customers.
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That is why, operating within the markets of many countries, Levi Strauss & Co. employs more than ten thousands of employees in order to represent the company world wide (Levi Strauss & Co, 2013). In 2008, the problems with implementing SAP ERP caused the problems with fulfilling orders. As a result, during a week, the orders were fulfilled incorrectly, and the company faced the economic decline of 98% in net income.
Problem Statement and the Consequences of the ERP Failure
SAP ERP was implemented in the company during the first part of 2008, but in the second quarter of 2008, different technical issues prevented Levi Strauss & Co. from fulfilling the orders correctly during the whole week. Thus, the drawbacks in the SAP ERP implementation caused the economic decline of the company in 2008. Consequently, the technical errors and problems in the SAP ERP implementation contributed to the significant economic losses associated with the decline in 98% in the company’s net income.
Causes of the Problem
It was found that the technical errors and internal control problems connected with the work of SAP ERP were determined after the system had been implemented in the company. Furthermore, there were significant difficulties in the connection and integration of the necessary legacy systems.
However, the company’s management did not pay the necessary attention to fixing and overcoming the problem. Thus, the causes for the SAP ERP failure are in ignoring the importance of the appropriate connection and integration of the legacy systems, ignoring the necessary testing, insufficient employee training, and the lack of the adequate management participation (Levi Strauss & Co, 2013).
Recommendations and the Solution Explanation
To provide the solution to the situation associated with the SAP ERP failure in Levi Strauss & Co., it is necessary to propose the alternative program to be used in the company.
The appropriate program is based on the integration and management of such company’s operations as the planning of the company’s operations, order entry, distribution, e-commerce, accounting, logistics, human resource management, and customer relationship management. The program based on the Oracle ERP and reporting platforms should unite all the company’s departments in one complex system which operates the enterprise-wide information and resources.
The program based on the Oracle ERP should be incorporated into the existing SAP ERP system following the principles of the parallel implementation when the work of the SAP ERP system is supported with the work of the Oracle ERP system in order to cover all the fields of the company’s operations.
From this point, operating the ERP platform, the program cannot be discussed as independent from the other systems. Referring to the principles of the ERP, the basic users are associated with accounting, finance, logistics, and production in order to realize the effective planning of operations and to contribute to the company’s progress (Baltzan, Phillips, & Detlor, 2012, p. 128-131).
As a result, the expected solution based on the Oracle ERP platform can be provided in the Excel format as the format actively used by the program operators because of its sufficiency and appropriateness to analyze and report the necessary data. The key variables which should be examined and analyzed with references to the system are the program’s simplicity, its flexibility, the potential for control, costs, the ability to provide the necessary integration, and accessibility (Baltzan, Phillips, & Detlor, 2012, p. 128-129).
That is why, the program based on the Oracle ERP platform can be discussed as effective to be integrated within the company to enhance planning, scheduling, forecasting, purchasing, and distribution activities. From this point, the use of the Oracle ERP along with the SAP ERP is possible only with references to the significant top management commitment and involvement in the process regulations and with the focus on the change management principles.
The Advantages of Implementing New Recommendations for the Company
The focus on the integration of the Oracle ERP based program along with the SAP ERP within Levi Strauss & Co. can be discussed as the effective strategy to overcome the issues associated with the SAP ERP failure in 2008. The program developed to reproduce the functions of the Oracle ERP is necessary to improve the operations’ coordination within the company and to provide the immediate response to the detected errors in the system’s work.
Thus, the systems which work on the same platform can be used for the integration and to support each other while combining the work of the systems’ elements. Such work of the systems which improves the coordination among the company’s departments can solve the problem and prevent the possible errors in the future.
Thus, the use of the proposed program can guarantee a lot of benefits for the company, and these benefits and advantages are closely connected with the possibilities to reduce costs, to provide the necessary technical support of the decision-making process, to guarantee the company’s increased agility, and to respond to the company’s transactional, informational, and different strategic needs. From this point, the purpose of the program’s use is in the reduction of operational costs and in the increase of the company’s efficiency.
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The solution based on the principles of the enterprise resource planning is effective to be used in Levi Strauss & Co. because the previously implemented program also depended on this platform which was chosen by the company’s managers as effective to promote the e-commerce and operational activities. The program is appropriate to organize the cooperative work of all the units and departments and to stimulate the progress of the change management within the company.
Along with responding to the company’s current problems in ordering, purchasing, and delivery of the products, the new implemented program can be discussed as effective to be actively used by managers to stimulate their involvement in predicting the potential successes and failures and in planning the coordinated work of all the company’s departments.
That is why, the focus on the new program which can be successfully implemented according to the idea of the parallel implementation with the SAP ERP system is also necessary to promote the managerial decision-making processes.
Baltzan, P., Phillips, C., & Detlor, B. (2012). Business driven information systems. Canada: McGraw-Hill Ryerson.
Levi Strauss & Co. (2013). Retrieved from https://www.levistrauss.com/who-we-are/company/