1. Why does local sourcing reduce economies of scale compared to using OnDemand
ID: 3819009 • Letter: 1
Question
1. Why does local sourcing reduce economies of scale compared to using OnDemand to manage the sourcing process?
2. Why was it important that the SAP Sourcing OnDemand comfortably integrate with Kerry Group's SAP ERP system?
3. What are the advantages of using a cloud computing concept for Kerry Group?
4. Why was it important for Kerry Group to use the pilot start-up approach for installing/implementing the OnDemand systems?
5. Why was it so important that Kerry Group use the services of the professional training company Olas, SAP's Irish training partner, to assist with training during system implementation?
Kerry Group Is on Your Table In business, sourcing is the set of activities involved in finding, evaluating, and then engaging suppliers of goods or services. Before a business can start to manage its supply chain, as described in this chapter, it must complete a sourcing process. Ireland's Kerry Group, a supplier of food ingredients and flavors to the worldwide food industry and of consumer food products to the British Isles, requires a wide range of raw materials from many suppliers. With annual revenue of €5.8 billion (about U.S. $10 billion) in 2013, it needs a lot of those materials. With plants in 24 countries and 40 percent of revenue from outside Europe, it is impossible for the people in one plant to know about all possible suppliers worldwide,Explanation / Answer
1. Why does local sourcing reduce economies of scale compared to using OnDemand to manage the sourcing process?
Local sourcing focusses on finding the best local vendor near every plant. Kerry group has plants at 24 places, so the staff at each place must find the best option for local sourcing.
On-Demand sourcing is strategic for the organization. Sourcing and procurement across the organization works as a team. This provides competative advantage.
Experts are needed at every location for local sourcing. It is easier to add or drop a location for a particular order.
The food sample evaluated at one place can provide information to the rest of the 23 locations. So better quality can be obtaned. The work gets divided and more globla options open up.
2. Why was it important that the SAP Sourcing OnDemand comfortably integrate with Kerry Group's SAP ERP system?
The organization is so big and wide-spread and the profit margins are thin in the food industry, they can not afford to have problems in implemetation. It ensures faster implementation and lopwer costs. The users will also be familiar with the existing system and the acceptance to the change will be better.
This like adding more functions to the currently running systems and hence comfortable integration is important.
3. What are the advantages of using a cloud computing concept for Kerry group?
-Per user, per month payment can be done so it is cost effective. You pay for what you use.
-There is no need to buy a new hardware for this sourcing implementation.
-Time required to implement is less as installation is already done. It is more of configuration, customization, testing and user training to go-live with the implementation. Implemetation time is less, hence the resources needed for testing etc are less.
4. Why was it important for Kerry group to use the pilot start up approach for installing/implementing the OnDemand system?
Kerry group had presence in 24 countries. If they needed to add change the width of quantity fields procurement screen, after running it for 3 days, then the data correction will be needed to be done to all the data entered from all the plants. Here they got a chance to make any changes needed or corrections needed by looking at the feedback of implementation in 1 country.
This makes the user acceptance better. As success at 1 place can make other countries follow the implementation easily. You need smaller support team to attend to the problems.
5. Why was it so important that Kerry Group use the services of the professional training company Olas, SAP's Irish training partner, to assist with training during system implementation?
Expert from Olas teamed up with the training team of Kerry's to make sure the good quality training.Kerry group had a training team however thet are new to SAP Sourcing OnDemand. They also have a technical team which is not into training.
To make sure that Kerry group gets the best out of the use of SAP Sourcing OnDemand, training is crucial.
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