FoxMeyer ERP Project

FoxMeyer Drugs, the 4th largest pharmaceutical distributor, in an attempt to increase

efficiency SAP system and a warehouse automation system and hired Andersen
Consulting to integrate and implement the two. Anderson Consulting(Accenture) was
hired to integrate and implement in a $35 million project. The company became
bankrupt and had to be sold off.

The timeline for the project was set to 18 months, which was considered to be an
aggressive timeline. The automation system threatened the warehouse employees and
objected to the transition. The ERP started as a part of being cost effective and
increasing competition. Based on a supply chain analysis, it was decided that an ERP
would offer a perfect solution for FoxMeyer to provide real time information and
automate and integrate inventory systems. The ERP system was supposed to help
manage company with ordering, purchase, inventory and sales. The ERP system would
not only automate but also streamline them.

Why did the implementation fail?

One of the reasons of the project failing was poor planning. The software that
they selected R/3, by SAP was originally meant to be used by traders and nit
wholesalers. The many requirements to help ease the functions of a wholesaler were
not delivered by R/3. Also, it was unable to handle large orders. FoxMeyers legacy

system handled 420,000 orders and their requirement was 500,000, but R/3 only
processed 10,000, just 2.4% of the legacy system.

FoxMeyer was advised by a Chicago based consulting firm about R/3 not being able to
handle the orders FoxMeyer wanted it to. There was no contingency planning by
FoxMeyer, one of its major customer declared bankruptcy after R/3 was launched.
There was a communication gap top-down. Only a top few from FoxMeyers worked with
Anderson consulting on this project, hence there was a communication gap between the
users and the system planners. One of the reasons that explains the failure of the
product for FoxMeyer is insufficient testing.

Things that FoxMeyer should have done to avoid the downfall of the project,

They should have selected better software than SAPs R/3

Develop contingency plan of how to survive in case of system failures
Involved all stakeholders
There should have had been a thorough testing of the software.
Should have consulted multiple consultants for second opinion of the software.
They should have performed a pilot test/ beta test of the software before
implementation.

Sources:

http://www.computerworld.com/article/2533563/it-project-management/it-s-biggestproject-failures----and-what-we-can-learn-from-them.html?page=2

http://higheredbcs.wiley.com/legacy/college/turban/0471229679/add_text/ch08/fowmeye
r.pdf