Keda Industrial Co.Ltd – Case Study

free essayKeda Industrial Co.Ltd is a company that engages in real estate, infrastructure, imports and exports, financial services, semiconductors, biochemical engineering, and large-scale machinery businesses in China. The company’s main business is producing and selling machinery for processing ceramics used in construction on a vast scale (Scherner, Muntermann, & Rossnagel, 2009). In 2005, Keda successfully installed SAP as their Enterprise Resource Planning solution, approximately five months after establishing an implementation team. The deployment of ERP enabled the firm to entered ceramics machinery industry that was dominated by European companies. Today, Keda’s offering includes building materials, energy resource, processing, and ceramics machinery. In addition, the company is providing technical consulting services and complete plant design to stone processing machinery.

Company Description and Key Business Drivers

Keda Industrial Co.Ltd was founded by Lu Qin in 1992 with an initial capital of about ninety thousand CNY. Due to insufficient initial financial assets, Keda began as a small-scale manufacturer of ceramics machinery in Guangdong province, China. During this period, the ceramics industry was dominated by European firms (Leung, Wong, Oddsson, Kwan, & Luk, 2008). To position itself in the industry, the company adopted a new business model that facilitated its rapid growth in the local market and prompted to emerge as a major competitor in the industry being among top 500 machinery manufacturers in China. By early 2000’s, the firm had surpassed many industrial competitors to become a leader in producing building materials and machinery (Scherner et.al, 2009).

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Keda’s business model relied on numerous business functions including research, development, inventory management, purchasing of parts of machinery and raw materials, and production. According to Leung et.al (2008), the said business model necessitated the establishment of many assembly workshops and lines, sales, marketing, and logistics to connect it with its broad customer base. This base mainly comprises construction material providers from foreign and domestic markets. In addition, the model significantly emphasized many aspects of innovation including production modernization as well as promoting the entire business. For instance, the company established enterprise post-doctoral workstation and invited relevant scholars to conduct extensive research on supply chain and human resource management to mention a few. Besides, Keda invested about CNY 45 million in establishing ceramic engineering test center to encourage research and advancement in available technology. Therefore, Keda has remained competitive in machinery manufacturing market particularly due to its continuous “pursuit of perfection” via “endless innovation” in the international market (Leung et.al, 2008).

Some of the problems that Keda faced hence prompting their decision to invest in information systems included competition with foreign and local companies, raw materials and parts, and growth without consequences. In particular, local and foreign enterprises challenged Keda in many fronts hence triggering it to stay innovative in business management, operation, and product development. Secondly, Keda faced a problem of raw materials and parts leading to frequent and scattered demands for more since most of the parts could not be reutilized in different products. As such, the need to monitor the quantity of purchased and utilized materials aroused, which was accomplished after ERP deployment. Lastly, competition with local and foreign firms prompted Keda to diversify its product lines and business through its commitment on R & D. In addition, highly assorted production functions and business lines influenced Keda to shift from single plant production mode to multiple plants (Scherner et.al, 2009).

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Analysis

Comparison between the Keda’s Approach and Success Principles

Success principles refer to roadmaps for a company or anyone struggling to achieve the planned objectives. In the implementation of ERP initiative, Keda chose Big Bang approach, although it was deemed risky. In particular, this method contrasts the course readings which advocates for the phased approach in which implementation of parts of the enterprise resource planning system is done by stages. Hence, it takes more time compared to the Keda’s approach but would probably cause fewer disruptions. Similar to provisions of success principles, the Big Bang approach was established to focus on optimism, create value, and improve efficiency. In this context, both the adopted approach and this success principle consider optimism as a key to any opportunity focus. Another similarity is evident in the effort to make a decision and implement it. Once promising options are identified, the best ones are selected, and the plan is developed to ensure opportunities are fully implemented (Leung et.al, 2008). For instance, the company decided to select the Big Bang approach which takes less time compared to the phased method.

Address to Case-Specific Questions

During ERP implementation, Keda faced the risk of peoples’ resistance. One of the main challenges in ERP system’s implementation is user’s resistance; hence, it was anticipated that some users would confront drastic changes till the business became undergone. The risk was evident at various stages of the ERP implementation process. For example, the collocation scheme was opposed. Another risk that Keda faced was production delay that resulted in business disruptions. Lastly, Keda had to decide on technological elements such as data characteristics that made it difficult for the company to choose the right ERP software.

Keda’s PM approach addresses the top ten project management challenges by providing top management support. In particular, the PM approach describes the meaning of top management support and how it should be applied in practice. For instance, top management support was evident in the involvement of company’s executives throughout the process of adopting ERP and also in incidents such as patience for the production delay. Secondly, the PM approach addresses the top management challenges by emphasizing that the roles should be clearly defined, and responsibilities should be appropriately allotted. Lastly, the PM approach stresses the importance of considering ERP as the entire organization’s effort rather than that of IT. As a result, it was easier to coordinate all the departments and realize high efficiency (Leung et.al, 2008).

Personal Takeaways

From this case, I have learned that business leaders should be well-informed about the customers, production, and sales before making business decisions to continue growing and retain its leadership position. Additionally, an entrepreneur should recognize his or her strategic goals before making any decision. Lastly, the case study enlightened me on the importance of putting much energy into research and innovation to draw more opportunities and identify the directions for further development. Additionally, I have learned that time is one of the major business challenges that I will have to overcome to meet the market demand.

In most cases, strategies work in certain cultural settings. For instance, in Keda’s case, the embarrassment was considered a significant punishment as it could result in career’s loss. However, this may not work for enterprise management in other countries. In addition, replacing employees who fail to comply with a particular system deployment may not be effective in other settings because it could create panic and insecurity to the affected. Moreover, some schemes can only work in particular companies. For instance, the collocation scheme that was adopted by Keda could be expensive regarding enterprise disruptions in some organizations.

Conclusion

Keda is a China-based company that mainly manufactures ceramics machinery used in construction. The company’s main competitors are local and foreign firms that triggered it to deploy ERP to reach a better position in the market. In addition, the company adopted Big Bang ERP approach that has many similarities to the success principles. This enabled the enterprise to overcome challenges such as users’ resistance, production delays, and data characteristics. Besides, this approach emphasizes top management support, group effort, and defining roles and responsibilities to overpower top ten management challenges.