GM locomotive unit puts ERP rollout back on track

General Motors' locomotive unit encountered such severe problems during a rollout of SAP's R/3 applications last year that its spare parts business virtually ground to a halt, forcing GM to launch an emergency turnaround effort six months after the software went live.

Officials at GM's US-based locomotive group said order backlogs and fulfilment cycle times still aren't at levels that fully meet customer demands, although business operations started to improve shortly after the rescue effort began in July.

The SAP software had to be reconfigured, flushed and repopulated with clean data, said Mike Duncan, director of worldwide aftermarket sales and development at the locomotive unit. The $US2 billion GM subsidiary hired a second consulting firm to help fix the enterprise resource planning (ERP) and supply chain management system after its first integrator completed the initial rollout.

The unit, which makes locomotives, diesel engines and armored vehicles such as tanks, also had to retrain end users and remap all the business processes that were being built into the new system.

The problems started when the locomotive group went live with R/3 in January 2001. The plan was to make aftermarket operations more efficient by replacing legacy mainframe systems with R/3 modules that could handle parts distribution, order entry, procurement and financial reporting, said David Scott, the unit's executive director.

Scott said there were no problems with R/3 itself, but the applications weren't properly configured to meet GM's needs. As a result, the aftermarket department couldn't accurately forecast demand or ensure that it had the right mix of parts inventories on hand.

"Our business processes were largely arrested by what happened," Scott said. "We spent a lot of money and expected to get something for it, and got something else instead. It was very disappointing."

Scott and Duncan declined to identify the first consulting firm that worked on the project, nor would they discuss the process they used to originally configure and operate the system. They also declined to disclose the cost of the project or the financial impact of the system problems.

A spokesman at SAP America declined to comment specifically on the situation at GM. "It continues to be a productive customer at this point, and we continue to work with [the group]," he said.

Duncan said the materials supply and forecasting modules in the ERP system were especially troublesome. The way they were configured didn't reflect the complexity of the distribution processes that the locomotive group uses to supply parts to customers in the US and other countries, he said. In addition, some legacy data wasn't adequately reformatted to work within the SAP applications.

The locomotive group brought in Chicago-based Technology Solutions to help reconfigure the ERP system. Scott said that although most aftermarket operations have returned to normal, GM is still looking for continued improvements from both IT and business process standpoints.

The locomotive group is also outsourcing SAP-related application support, end-user training and follow-on software implementation to Technology Solutions. Despite the start-up problems, GM plans to install R/3 in the locomotive unit's manufacturing operations and other departments in the next few years.