He is admitted to practice in the state of Texas and before the U. Courts of Appeals for the Fifth Circuit and the U.
Morale of the employees was low due to the speculation that they might be laid off after the ERP system commenced. Lack of ownership from the end users.
Inventory was damaged due to mishandling by the employees. Overall delay in the supply chain which affected their service and reputation.
Poor quality in functionality; Incurred additional cost to manually resolve some parts of the orders. FoxMeyer filed bankruptcy Table 1: Summary of the events and effects taken place from the start of Delta III project These events had happened without proper risk assessment being conducted at the initial stage of the project.
The unforeseen costs incurred were: Lack of contingency planning — there was no contingency plan to manage changes in the business operations.
Further investigations were launched to identify the root causes of project escalation.
FoxMeyer Health Corp. clarified that the Chapter 11 bankruptcy filing applies not to itself as the holding company, but only to its drug distribution unit. FoxMeyer Drug accounted for the lion's share of its parent company's $ billion in annual sales. FoxMeyer Drug is a wholly-owned subsidiary of the FoxMeyer Corporation, a holding company with no employees, but which shares the same board of directors and same executive officers with FoxMeyer Drug. FoxMeyer Drug and FoxMeyer Corporation filed for bankruptcy in Delaware. Consequently, the district court stayed further proceedings against. McKeeson to Purchase FoxMeyer Health. Mergers: The $million deal is among efforts by the buyer to expand its drug business. FoxMeyer placed its FoxMeyer Drug Co. unit in Chapter 11 bankruptcy protection in August after drug makers cut credit and a planned sale to New Jersey investor William Taggart fell through.
A model of factors suggests that escalation of the project was promoted by combination of project, psychological, social and organisational factors.
Likewise, it was perceived that the project could make it through. In addition, abandonment of the project would high likely give a negative image of SAP and Andersen Consulting. The senior management being advocates of the project had unknowingly caused project escalation. Certainly, a proper risk management framework would have prevented escalation of the project and saved FoxMeyer from bankruptcy.
Discussion The failure of Delta III project can be viewed from several perspectives, based on the risk factors affecting enterprise-wide information management projects: Such software would require a high degree of customization in order to fit seamlessly into a specific business process.
Hence, the key is to reengineer the business process and avoid customization. FoxMeyer, however, was unable to redesign their business processes to be consistent to the software specifications. There was an evident on lack of data standardisaton in the ERP system.
FoxMeyer was over dependent on Andersen Consulting in the implementation as they did not have in-house personnel with the necessary skill to handle the project.
Since SAP was new to the wholesaling industry, inexperienced consultants from Andersen tapped on the opportunity to learn SAP technology business.
Management structure and strategy: There was a change in management strategy and support. In earlythe CEO of FoxMeyer, who was seen as a strong supporter of the project, was asked to resign due to the delays in the new warehouse and realizing the projected savings of SAP implementation.
Furthermore, the management was reluctant to acknowledge the system problems and agreed to have 90 days early implementation even though the system was not fully tested. User involvement and training: There was lack of user involvement during the initial stage of the project as there was low participation from the end users in the analysis and design process.
Because of this, user requirements were not completely addressed and there was no training for the end users. The automated warehouse had been perceived to eliminate unnecessary manual labour and lay off employees.
Pre-implementation testing was inadequate due to tight project schedule. Status of the project status was not timely managed to ensure that it followed according to schedule and budget. We used the Riskit method for the risk analysis as it is considered to be effective and easy to understand.
Using the Riskit method, the risks identified earlier can be classified into risk factors and events and results documented in the Riskit analysis graph as shown in Figure 6. The Riskit analysis graph, illustrated with possible relationships between the risk elements, is a graphical formalism which enables better communications and deeper qualitative understanding of risks.
From the graph, some risk factors can be seen to influence multiple goals. Another feature of the Riskit method is the Riskit Pareto ranking technique which uses two-dimensional space to position risk scenarios by their relative probability and utility loss.
First, risk scenarios are ranked by probability as shown in Figure 7.
At the same time, stakeholders would rank the risk scenarios by utility loss based on their individual perspectives as shown in Figure 8.
Risk scenarios ranked by probability Figure 8: Risk scenarios ranked by utility loss The two ordinal metrics are combined together to construct the Riskit Pareto table as shown in Figure 9.
A Pareto efficiency of the risk scenarios over other scenarios can be easily assessed from the table; a risk scenario is Pareto efficient over all other scenarios if it is located at the upper left-hand corner in the table.The ultimate cautionary tale for any IT manager about to pull the trigger on a new ERP implementation?
FoxMeyer Drug. , the company's bankruptcy trustees filed a $ million lawsuit in FoxMeyer Drug filed for bankruptcy after scope creep on a robotic warehouse.
Engineers at Grumman called a system “Naziware” and refused to use it. 21 st Century Insurance Group wasted a lot of time and money on a project that could have used off-the-shelf components.
Following entry is a record in the “Catalogue of Catastrophe” - a list of failed and troubled projects from around the world. Fox-Meyer Drug - USA Project type: Enterprise Resource Planning Date: Aug (filed under golden oldies) Cost: $40B write down in share value - company bankrupt.
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Nov 21, · Get YouTube without the ads. No thanks 1 month free. Find out why Close. FoxMeyer Drugs echo5h. Loading Unsubscribe from echo5h? The Truth About Bankruptcy - Duration: Jan 31, · Supply Chain Management What is supply chain?
January 31, Supply Chain Matters. The FoxMeyer Drugs’ Bankruptcy: Was it a Failure of ERP? Judy Scott, The University of Texas at Austin  The 11 Greatest Supply Chain Disasters.
Supply Chain Digest, January