Smidtco Case Analysis

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burgeoning costs as the number of errors would be greatly reduced. But, a new IT Manager would take time in getting acquainted with the SchmidtCo IT systems. A bigger salary might also have to be paid to the new IT Manager.

iii) SchmidtCo had the option of dumping DTech altogether and going for the other vendor they had shortlisted during the selection process. The implementation with DTech had been plagued with errors and problems. A new vendor would offer a fresh start and perspective. The new vendor would come with a different set of consultants and a different ERP system which might be less error prone. The other vendor was also quite experienced. But, switching to a new vendor might be too big an overhaul. The new ERP system would have to be implemented all over again. The money spent on DTech’s ERP system ($200,000) would all go to waste.

iv) SchmidtCo could consider the option of continuing with DTech with the new personnel that had been assigned to the project by the Senior VP of DTech. The new personnel would help rejuvenate the project. DTech’s strengths were warehouse and inventory management which were also SchmidtCo’s needs. Also, the money already invested in DTech’s ERP system would not go to waste. But, sticking to SchmidtCo might be risky because even with new personnel there might be little change in the functioning of the project.

Decision

SchmidtCo should stick to DTech’s ERP system and try improving the quality with the new team of DTech as well as new personnel on its own side. Sticking to DTech would prevent the huge upheaval that would occur if they decide to switch to another vendor. Also, SchmidtCo would avoid too much extra cost that they might have to incur in case of a new vendor.

Action Plan

i) John Schmidt should work closely with the new implementation team of DTech to ensure the efficiency of process.

ii) A new full-time project manager and IT Manager should be hired by SchmidtCo.

iii) The new SchmidtCo personnel should be made well acquainted with DTech’s ERP system.

Contingency Plan

Another course of action could be changing vendors because a new ERP system with a new team of people might bring fresh ideas and also lead to lesser errors compared to DTech.

Exhibits

Option-Objective Matrix

Option/Objective Managing Inventory Minimizing Costs Efficient Implementation of ERP

Hiring Full-Time Project Manager + - +

Hiring IT Manager + - +

Firing DTech + - +

Continuing with DTech + + +