ERP Implementation in Rolls-Royce

RR
RR is a world leading provider of power systems and service for use on land, at
sea and in the air, has established strong position in pglobal markets civil
aerospace, defence aerospace, marine and energy.

Present markets demand both price and quality in order to greater flexibility and
responsiveness
Some organization have decentralized their operations by global outsourcing of
activities.
Manufacturing resource planning (MRPII) and Enterprise Resource Planning (ERP)
Advantages of ERP:
o Reduced cost
o Rapid implementation
o High system quality (Lucas et al., 1988)
Large-scale enterprise system is built in pre-determined business process methodology
o Statement above cause:
Customization is a crucial, lengthy, and costly aspect in successful
implementation of ERP system.
ERP aims to integrate business process through the support of an integrated computer
information system (OBrien, 1999)
However some ERP systems do contain certain modules that were not originally used
within MRPII such as:
o Computer Aided Design (CAD)
o Distribution Resource Planning (DRP)
o Tool Management Systems (TMS)
o Product Data Management (PDM) (Yusuf, 1988; Prasad et al., 1999)
Difficulties experienced by ERP Implementation:
o Costly development
o Manipulating data stored within system
o Organizational readiness
Accelerated SAP (ASAP): suggests the adoption of a big bang implementation.

The situation before ERP:

RR used over 1500 systems before ERP

Expensive to operate
Difficult to maintain and develop
Did not provide accurate, consistent and accessible data
Use MERLIN (Mechanised Evaluation of Resources, Logistics, and Inventory)
Scheduling system which ran on MRPII system principles.
Capable but prone to manual manipulation

Had difficulty communicating with another manufacturing system named

IBIS (Inventory Based Instructing System)
Used at Bristol and Ansty facilities
Could not be track accurately
o Use CCA (Corporate Cost Accounting)
Used to financially monitor transactions
Covered pipeline inventory
Inter-site transport
o Use different system that have interfacing problems with each other as they had
different databases and file formats
IT at RR
o 1966 partnership with EDS (Electronic Data Service)
EDS were responsible for the development of the companys IT system.
Purpose: allow RR to focus on its main area of expertise.
The implementation project:
o Problem:
Cultural difficulty
Business difficulty
Technical difficulty
Cultural Problems:
o New function might not get the full appreciation the legacy systems once had.
o Implementation of new system require training which cost is very expensive.
Business Problems:
o Business Process Re-Engineering (BPR) programme consisted 4 steps:
Involved drawing and mapping the current processes
Involved identifying any problems or issues raised from the mapped
process
Involved applying some of these issues to a demonstration of SAP, to
identify potential problems within the new system.
Involved the re-mapping or modification of the processes in line with SAP.
o Unmodified software implementation Vanilla SAP
Technical Problems:
o Accuracy of data
o The new system requires the retrieval of old data from the legacy systems that
has to be normalised, screened and stored in a sensible data format within the
new systems data repository
issue: duplication data
o Rolls-Royce has nine principal business processes

Implementation
Phase 1

o Create scope, plan, and budget.

Phase 2
o Core structure were identified.
o Integrated programme management (IPM) was adopted and cover
whole business.
o Completed at a cost of 5.2 million pounds.
o Had spent two weeks on planning.
o Project Changes

o The completion of wave one was deferred for about 6 months.

Reason:
To give the line organizations more time to prepare, train
and clean up data.
To provide an additional 5 months period for pilot running
and early development of the system.
To provide additional time for the completion of other prerequisite projects being managed by BPF. Specifically the
deployment of product data manager (PDM) and shop
floor data manager (SFDM) on which SAP is critically
dependent.
To provide additional time for resolving difficulties with
successful use of SAP at RR Allison.
Phase 3 (Implementation)
o Too large to implement in one go, and thus was divided into two
waves.

Both waves were concerned with the physical implementation of

the system and its architecture
Wave One
Concerned with the replacement of legacy system.
Introducing IPM.
Introducing SFDM, Shop Floor Data Management.
Providing new capabilities for gas and turbine operations.
Wave Two
Approximately 1 year in duration.
Not operational until wave one finishes.
Concerned with implementing engine assembly, spares,
logistic and human resources elements within the project.
One the new system shows a positive response the older
systems was phased out.
IPM completely covered the whole business.
Legacy system switch to view only as SAP become
executive system.
Suite 1
o Plan the supply chain
o Master schedule key programmes
Suite 2
o Plan and schedule the factory
o Schedule the shop
Suite 3
o Operate the Factory

ERP Pilot
Run for 3 months.
Focus on part of transmissions and structures operations unit.

Chosen because the facility only produce 280 parts, and

material flowed into the facility at low volumes from
external suppliers and internal operational units.
Purpose
o Business principles
o Processes
o Procedures
o Role definitions and behaviours
o Software, hardware and data transfer
o Implementation of ERP created two new roles at RR
MRP Controllers
Capacity Owners
Go Live
o Difficult part: cut-off transaction: transferring the data from legacy systems.
Data must be kept in a stable state for a period of roughly 10 weeks.
Transaction data
Master data
o Next step: involved running the MRP system to initialize the whole system.
o Took 2 weeks.
o After the Go Live then switched to view only mode.
Enabled comparison to be performed between the old and new systems.
Project Risk
o The non-delivery or non-availibility of reliable IT hardware and infrastructure both
before and during implementation
o Possible failure to give ERP adequate priority due to the number of existing and
ongoing business improvements
o Possible failure to cut over to the new system through and inability to load data.