Sap for Atlam

Keda’s SAP Implementation is the restructuring that the company needed to go through to expand and be more productive with the products they were creating. At first the company had a lot of problems with keeping track of inventory and how much a product cost to be made. The system they had could not keep up with the growth of the company. They needed a new system or they would continue to lose money fast. To start off they looked at where the system that they had went wrong. It was that fact that the system didn’t cover multi-product production. This was killing them in the long run so they decided they needed a change. They looked at 20 different management systems and had them all come in to present their product. Keda also had them give reverences that proved that the product worked. Keda used this as a learning opportunity to figure out what work and didn’t with other companies. They wanted a system that was customizable to their products and the system that they wanted. There were nine systems that could work for their company they decided on SAP as the winner. They then start to work their way through the system so that it would work with ever department so everyone knew what their job was and who they need to work with to do it. They created a management structure for each department, they then invited those heads to work with the IT department to make the system able to talk between each department. The manager didn’t like this at first because they had to work

The case shows the implementation of SAP ERP solution in NIBCO, a manufacturer of pipe and fittings, a mid-size manufacturer with about 3,000 employees and revenue over 460 million USD. The company

This mini-case provides a review of the methodology and rationale associated with the various capital budgeting evaluation methods such as payback period, discounted payback period, NPV, IRR, MIRR,

The NPV compares the inflow of cash against the flow of cash to make the investment. With the cash flows occurring over a period of time, NPV also takes into account the cost of capital. The cost of capital or discount rate allows the company to weigh the present value of capital today with the investment capital’s present value. Futronics Inc. investment would have an NPV of $138,642.39. The NPV of this investment would add value to Futronics Inc.’ worth.

The production staffs viewed the adoption of SAP as an ERP system that focuses on function such as inventory, finance, accounting, production, etc. They had doubt about how SAP modules are relevant to their business processes. The production staffs believed the functional view poorly represents the interaction with other functional views.

NPV is known as the best technique in the capital budgeting decisions. There were flows in payback as well as discounted pay back periods because it don’t consider the cash flow after the payback and discounted pay back period. To remove this flows net present value (NPV) method, which relies on discounted cash flow (DCF) techniques is used to find the value of the project by considering the cash flow of the project till its life. To implement this approach, we proceed as

Cash inflows and outflows can occur at any time during the project. The NPV of the project is the sum of the present values of the net cash flows for each time period t, where t takes on the values 0 (the beginning of the project) through N (the end of the project).

The research problem could be considered as a gap between the desired SAP platform implementation indicators and the current ones.

While NPV method may be a more accurate way in capital budgeting process, it is worthwhile to note that because of the longer time it takes to generate the data (using the proper discount rate, for example), other easier and simpler methods like payback and ARR can be used as initial rough guides in the process.

There are two methods which is applied to this project. First is by calculating net present value and second is by using Internal rate of return (IRR). Also, it determines how many years that Riverlea earns back from its investment if they take this project. This is called payback period.

The actual production would begin in the third quarter of this year, therefore only half year’s depreciation should be counted on Equipment and IT communication in 2004 (According to Appendix A). The following years (2005-2008) incremental cash flows are computed by the same method. However as the IT equipment and furnishings would be depreciated on a straight line basis over 3 years, thus in year four (2007), there would be only half a year’s deprecation left and after that it will be used up. The last year’s net cash flow in 2009 should be included the extra terminal Value on that year, which includes 24 years’ residual value on building and one year and a half residual value on equipment totaled $2,990,412 with two assumptions of by using residual book values for the building and operating equipment and there will be no further NWS advantage after year 2009. Finally, by obtaining 6 years’ incremental cash-flows and discounting them back to time zero (with the estimate rate of return by 15%) lessing initial cost to get an appealing NPV of $1190528 (Luehrman, p. 3).

The internal rate of return (IRR) and the net present value (NPV) techniques are 2 investment decision tools that satisfy the 2 major criteria for the correct evaluation of capital projects. This criterion is that the techniques should incorporate the use of cash flows and the use of the time value of money. This makes them viable techniques for evaluating investment proposals.

Internal rate of return (IRR) is the discount rate that makes NPV equal to zero. It is also called the time-adjusted rate of return.

MBO and IT : Information technology system in Makro is a supporting tool which is tailored according to the business needs. So for a greater success MBO was implemented as a pure business project. One of the ideas of using SAP technologies with employees’ appraisal system for Makro employees is to make the application open, so that every appraised employee will have the access to it. The solution is tailored not to make any mistakes, or false entries.

SAP was an integrated business application package that covered most functions of an organization like Financial Accounting, Controlling, Asset Management, Sales & Distribution, Material Management, Human Resource and so on. Implementing SAP for ATLAM was not easy as they were previously