Enterprise System of Colgate-Palmolive - Case Study Example

Enterprise System of Colgate-Palmolive AFFILIATION: In the paper, the importance of Enterprise Resource Planning (ERP) system for Multinational Corporation i.e. Colgate-Palmolive is discussed. The company had a decentralized IT infrastructure that was creating a lot of business and operational issues in its offices across the world. In order to have a well-integrated IT infrastructure, the company decided to revamp it by installing the latest ERP system so that there was an effective co-ordination among all its business operations. The new system installed in the company was SAP R/3 along with Oracle so that the business activities across the globe were conducted efficiently. The implementation of new system was time-consuming and expensive and everyone in the organisation had to be trained to operate the system. In the long-run, the company benefited from the system as everything was well-organized and appropriately integrated. 1. Introduction Colgate-Palmolive is the leading Multinational Corporation that has been offering top quality products to its customers at competitive price rates. Along with its subsidiaries, the company is manufacturing and marketing oral, home, personal care and pet nutrition products. It has divided its operations into two distinctive divisions i.e. Pet Nutrition and Oral, Home and Personal care. Colgate-Palmolive markets the products in more than two hundred countries and it is leasing about 330 properties that comprise of research, distribution, office and manufacturing facilities (Laundon & Laudon, 2005). The major customers of Colgate-Palmolive are the top-ranked retailers who have expanded their operations across various national boundaries and they want to be ensured that they will have adequate supply of the company’s goods so that their needs can be managed across various regions (Elmeziane, 2011). 2. Initial problem at Colgate-Palmolive In order to handle the problems that were faced in the IT system such as duplication of the database on each individual system, maintenance and development of IT system for efficient working and etc., the company decided to implement a system that ensured effective and smooth functioning of its operations. The best solution for development of a well-integrated global IT infrastructure was the consolidation of disparate SAP software systems in each global office which led to the development of SAP Global Delivery Model. The main problem was with the supply chain management structure and this model was the best solution for consolidating the IT infrastructure in its worldwide operations and as a result all of its business processes became efficient and smooth. 3. Importance of Enterprise Resource Planning (ERP) for effective Supply Chain Management (SCM) Supply Chain Management (SCM) is mainly associated with the sourcing and receiving of materials; it comprises of key functions such as management of purchasing and warehouse management processes so that the inventory level can be appropriately maintained. The major elements of purchasing management process is requesting the quotes for various purchasing orders; while, the functions of warehouse management comprise of receipt of goods, inspection of the quality of received goods and returning goods that are defected (Ajayi & Omirin, 2007). The main role of ERP is maintaining proper records so that accounting and bookkeeping can be effectively done; each ERP system has a general ledger which is the central module of this IT system. All the accounts of a company are generated by the specialization activities of the system; with the help of a structure of an account, sub-accounts can be developed that will ensure that data which is collected can be examined with a much detailed analysis. Hence, with the help of ERP, SCM can be effectively done by means of Manufacturing Resource Planning (MRP) feature present in the ERP system (O’Leary, 2004). With the help of SCM software in ERP system, an organisation can develop an effective supply chain plan that will ensure that the customer needs are appropriately achieved. The ERP system allows the inventory and warehousing costs of Colgate-Palmolive to be reduced at a great extent; hence, huge amount of the company was saved and it ensured the company to make investment in other avenues so that it could earn good amount of revenue. 4. ERP implementation process is lengthy and expensive The global implementation process of ERP software is time-consuming and expensive as there are various factors that need to be considered so that the ERP software plan is adequately developed and all hurdles that can be encountered in the implementation process are dealt effectively (Sager et al., 2006). Every organisation has to keep this point into consideration that an effective ERP system will work properly when its implementation process is planned. This comprises of evaluation methods so that its implementation effectiveness can be measured on a frequent basis. Almost all the large-scale and complicated ERP systems take more than twelve to eighteen months for installation and starting the system operation in the organisation. The fees of the consultants usually range in between US $ 150 to $225 for an hour. The SAP AG is also offering consultant education programs so that the systems can be customised according to the requirements of an organisation and the employees are trained in handling the system (Adebayo, 2007). In most of the SAP software implementation processes, the business process reengineering is done so that an organisation has all the features that will ensure that the SAP system will work productively. Every organisation has two options for implementation of SAP R/3 software i.e. either to reorganize itself to be compatible with the software or alter the software to ensure compliance with the organisational structure. Colgate-Palmolive had to take everyone on board to understand the importance of ERP package, train the staff to work with the software, make changes in the organisational structure to install and implement the software and ensure finance is available for financing the system. Therefore, the time for implementation of system is long and cost of ERP system is high which is justified with the benefits that the company will gain from implementation of the entire package. 5. Technologies Supported by Existing IT infrastructure of Colgate-Palmolive With the help of the present IT system implemented in Colgate-Palmolive, the information exchange process across regions is faster and quicker; it will ensure that teams that are dispersed in different countries can work collaboratively by making effective use of the data that is available on the common systems (Subramoniam, Tounsi & Krishnankutty, 2009). Colgate-Palmolive has implemented the SAP R/3 ERP software along with Oracle related DBMS (Database Management System) and Solaris Operating System developed by the Sun hardware platform. With the help of the existing system, Colgate-Palmolive will be able to enhance its Customer Relationship Management, Supply Chain Management and Website development. According to Kumar, Maheshwari and Kumar (2003), the major technologies that are supported by the present system in the company are Enterprise Service Bus (it will ease both the message routing and translation of message within the solutions that are application integrated), Informatics (it is used as a ETL i.e. Extract, Transform and Load tool) and Extended Markup Language (XML – it provides a powerful interface which allows various applications to pass data to and from various applications). With the help of the best IT infrastructure, Colgate-Palmolive will ensure that it has access to complete and in-depth information about the customers so that it can develop products in accordance to their demands. The company’s production has enhanced since the implementation of this system as information exchange has become faster and quick decisions can be effectively made. 6. Advantages and disadvantages of existing IT system in Colgate-Palmolive The companies that have presence in various regions globally have to ensure that they are integrated with perfection so that each region has instant access to valuable information about the business and its customers so that it can make its decision wisely and timely (Roman, 2009; Elmeziane, Chuanmin & Elmeziane, 2011). The main advantages of the existing system in Colgate-Palmolive are that a perfect integrated system is developed that will ensure co-ordination among various functions of an organisation; various processes of organisation and flow of work can be streamlined; communication among departments become easier and effortless as information and important messages can be effectively exchanged; the customer satisfaction and service is enhanced; the forecasting and tracking of customer sales can be done effectively and an organisation’s performance, productivity and efficiency levels can be improved (Hill Associates, 2006). The major disadvantages of the present system in the company are that in major situations, the customisation scope gets limited; adequate efforts will be required for training the existing staff and reengineer the business processes; might have difficulty in gaining access to the technical support; the cost is too high and there can be lack of financing options; and the system is too complex and less flexible so that the organisation cannot be moved in any new direction easily (McNurlin, Sprague, & Bui, 2008). 7. Future systems and applications that can be implemented Colgate-Palmolive is the best company in terms of its business activities as it has enhanced its operations by implementing effective and productive IT systems along with CRM, MRP, SCM and ERP systems that have helped the organisation in achieving its goals efficiently. The latest software is Software as a Service (SaaS) that has transformed the potential in which Information Technology (IT) is used to allow the professionals of IT department to think about their role as a provider of computing service for an enterprise (Hayen & Andera, 2005). SaaS is a productive software-delivery process that allows creation of opportunities for the IT department for changing the focus from deployment and supporting of applications to services management that are provided by the respective application. The service-centric IT system will allow the company to produce business that is of higher value; services are offered in the best way which will ensure that the business utilizes all the resources effectively and it will ensure that the business is able to achieve its goals with perfection. Hence, it is important for an organisation like Colgate-Palmolive to continuously upgrade the system so that it can enhance its production and efficiency level. 8. Conclusion From the case study of Colgate-Palmolive, it is evident that a global organisation has to monitor its performance on an on-going basis so that it has an idea about the growth in profitability as compared to its growth in business operations. Since the company had various issues with its manufacturing and development facilities, it had to work on its IT infrastructure so that data related to the business operations can be transferred at a faster pace. The best decision that was made by the company was restructuring the entire organisation that comprised of activities such as business process reengineering, training employees to learn the skills required for the operation of various businesses, effective team working among the team members and integration of various processes so that productivity level is enhanced and it becomes more efficient in the market. Hence, the management team had a clear vision about the objectives that will be attained in the long-run; although the entire implementation process is time-consuming and expensive but the company is reaping its benefits for unlimited years. 9. References [1] Adebayo F.A., 2007. Management Information System for Managers. Ado-Ekiti: Green Line Publishers. [2] Ajayi, I. A. and Omirin, F.F., 2007. The use of Management Information Systems (MIS) in decision making in the South-West Nigerian Universities. Educational Research and Review, 2 (5), pp. 109-116. [3] Elmeziane, K., Chuanmin, S. and Elmeziane, M., 2011. The importance of critical success factors of Enterprise Resources Planning implementation In China. Business Management Dynamics, 1(6), pp. 1-10. [4] Hayen, R. and Andera, F., 2005. Investigation of the integration of SAP enterprise software in business curricula. Issues in Information Systems, 6(1), pp. 107‐113. [5] Kumar, V., Maheshwari, B. and Kumar, U., 2003. An investigation of critical management issues in ERP implementation: empirical evidence from Canadian organizations. Technovation, 23(10), pp. 793-807. [6] Hill Associates, 2006. Enterprise Applications: A Conceptual Look at ERP, CRM, and SCM. [7] [Online] Available at: http://www.hill.com/resources/whitepapers/enterprise_apps.pdf> [Accessed 7 November, 2012] [8] Laudon, K.C. and Laudon, J.P., 2005. Management information systems: Managing the Digital Firm. USA: Prentice Hall. [9] McNurlin, B.C., Sprague, R.H. and Bui, T., 2008. Information Systems Management in practice. 8th ed. NJ, USA: Prentice Hall. [10] O’Leary, D.E., 2004. Enterprise Resource Planning (ERP) Systems: An empirical analysis of benefits. Journal of emerging technologies in Accounting, 1, pp. 63-72. [11] Roman, K., 2009. Benefits of Implementing an ERP: Top 10 Benefits an ERP Implementation Can Bring to Your Institution. [Online] Available at: [Accessed 7 November, 2012] [12] Sager, J., Mensching, J., Corbitt, G. and Connolly, 2006. Market power of ERP education – an investigative analysis. Journal of Information Systems Education, 17(2), pp. 151‐161. [13] Subramoniam, S., Tounsi, M. and Krishnankutty, K.V., 2009. The role of BPR in the implementation of ERP systems. Business Process Managemen Read More