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Using Shanghai U-Express International Logistics Co., Ltd as example.

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LGT5113 Enterprise Resource Planning
ERP Implementation
Case Study: Shanghai U-Express International Logistics Co., Ltd.
Group 1:
FANG Chen 21042885G
LI Qiying 21054452G
MIAO Xuye 21046921G
(Leader) PAN Yue 21048749G
WANG Lijun 21067978G
WU Meng 21056584G
Contents
1
Company
Analysis ··
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Company
Introduction ···· · · ·· · · ·· · · ·· · · ·· · ·
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Department
Introduction · · · ·· · · ·· · · ·· · · ·· · · ··
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ERP
system
application · · · ·· · · ·· · · ·· · · ·· · · ·
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Operation
Flow · · · ·
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Existing
Problems
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Solution
Explorations ·
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Optimization
of
Kang
Tai
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Selection
SAP
system··
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Financial
module· · ·· · · ·
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Introduce
RFID
technology
into
SAP· · ·
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Human
Resource
module· · ·· · · ·
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Overall
Comparison · · ·
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3
Final
selection · · ·· · · ·
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3
Implementation
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Implementation
Process
and
Methodology · ·
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Risks
and
difficulties· ·
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· 19
Methods
to
alleviate · ·
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Impact
of
the
rectification
program ·· · · ·· · · ·
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1.Company Analysis
1.1 Company Introduction
Shanghai U-Express International Logistics Co., Ltd. is a first-class freight
forwarding enterprise and NVOCC qualified. The company specializes in the
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transportation of chemicals and dangerous goods and has worked with many shipping
companies and airlines in the transportation of chemicals, pesticides, pharmaceuticals
and intermediates, and other dangerous goods. The company also undertakes
international freight forwarding business by the sea, air, and road, import and export
inspection and quarantine, customs declaration, road freight forwarding, road
handling, international shipping auxiliary business (NVOCC business), exhibition and
conference services, business consulting, business management consulting.
1.2 Department Introduction
Five functional departments headed by a manager work together to run the company’s
operations. The five departments are Warehousing, Business, Logistics, Human
Resources, and Finance. The Warehousing Department is responsible for the packing
of goods ordered by customers and the entry and updating of inventory reports in the
warehouse, as well as reasonable inventory management; the Business Department is
responsible for developing and maintaining customers, contacting shipping companies,
booking space with shipping companies and reserving sufficient sea, land and air
space for the products that customers need to deliver; the Logistics Department is
responsible for the transportation of customers’ products and the collection and
binding of large container seals; the Human Resources Department is responsible for
the recruitment, leave approval and logistics of the company, as well as the
performance appraisal of the staff and the formulation, adjustment and distribution of
the remuneration policy of the unit within a reasonable range; the Finance Department
is responsible for the accounting of the company and responding to the financial
income and expenditure of the company, supervising and checking the
implementation of various financial activities and financial plans of the enterprise, etc.
1.3 ERP system application
The integrated system that supports the daily operation of all departments of the
company is the ‘Kang Tai’ system with the following features:
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It can provide multi-departmental collaborative processing, a large number of
business and business data statistical analysis solutions of personnel work authority
management. With an open and free personalized statistical combination function, and
visible and available information output function. Support off-site remote, real-time
management of the business and financial information of group headquarters, local
branches, offices, and collection points. Data docking with port line container and
cargo information to realize automatic data pushing. Data docking with EDI center to
realize one-key sending of manifest, booking, bill of lading, and other electronic EDI
messages. In line with the national “camp reform” tax reform, we have developed an
interface that supports various formats of VAT invoicing, which can effectively
improve work efficiency and reduce the error rate of manual input through interface
technology. The primary version of the Kang Tai system is not a perfect ERP system,
so there are many operational problems and a lot of room for improvement and
rectification.
1.4 Operation Flow
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The main processes of the company include,
a. Commissioning: This refers to the customer initiating a marine export booking
commission with the freight forwarding company, reflecting the detailed consignor,
consignee, and other relevant information on the bill of lading.
b. Warehousing: The customer places the commissioned products in the warehouse
of the freight forwarding company, and the warehousing department is responsible for
information update and inventory management.
c. Booking: After the freight forwarding company receives the commission, the
business department will make the booking and then inform the specific ship name
and voyage, the date of departure, and other information.
d. Delivery: According to the contents of the paper received by the exporter, the
logistics department will deliver the goods to the designated yard station.
e. Confirmation of the bill of lading: The freight forwarder confirms the information
shown on the bill of lading with the customer and finally submits it to the shipping
company.
f. Customs declaration: The customs declaration company submits the required
documents to the customs system and waits for the customs audit and release.
g. Signing: The consignor sends the bill of lading to the consignee, who takes the bill
of lading, which represents the evidence of property rights, to pick up the goods.
1.5 Existing Problems (Phase 1)
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Warehouse department problems:
Since this is a company responsible for the transit of customers’ goods, after receiving
an order, the customer will deliver the issue that needs to be mailed to the company’s
warehouse, and the warehouse manager will send the goods from the warehouse to the
logistics department for transit after counting and entering the corresponding
customer information. This means that the warehouse almost every day there are new
goods in and out, each commodity in the warehouse administrator will use a special
code to correspond to the specific customer information (including the customer’s
personal information, the target address, etc.). In this process, the original company
system can only store the code, but the process of coding goods and the process of
entering the system requires manual operation, and then even if the warehouse
inventory information can be synchronized in real-time, there is no guarantee that
100% of the time in the entry of information will not be wrong.
The main problem in the warehouse sector is that all goods coming in and going out
need to be manually entered into the warehousing status and code, which cannot be
fully automated, which leads to an inevitable error rate and relatively low efficiency.
At the same time, in special periods, due to delays between the system and other
departments, making and upstream business departments and downstream logistics
departments produce communication is not timely, which can easily lead to when the
business sector accepts too many customer orders, it is difficult to find enough
warehouses for storage, and too late to ship out of the situation, as well as in peak
periods of difficulty in handling.
Business department problems:
As the core department of the company, the business department’s daily work requires
access to all customer and order information and its entry into the system to facilitate
other subsequent business processes. When a customer order is received, the
salesperson must manually enter the customer information (which includes customer
name, product category, product quantity, estimated arrival date, etc.) into the system.
All customer information and order information are entered manually into documents,
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which is labor-intensive, time-consuming, and prone to input errors. Once an input
error occurs, the information needs to be changed manually by business staff and it is
difficult to update the changed information to each department in the first instance,
which may lead to errors and delays in the entire business process, affecting the
timeliness of the shipment of customer products and adversely affect the maintenance
of the company’s customer relationships.
Logistics department problems:
As mentioned before, the responsibility of the logistics department is the transportation of
customers’ products and the collection and binding of large container seals. After the
transportation process, the containers should be sealed at the dock by a special strip which is used
for the recognition of different bunch of goods. However, the company is using wholly manpower
to do the elaborate work which cannot tolerate any fault. If there appears a mismatching of the
goods and the strip, the sealed container has to be re-opened which may cause a delay of the
whole business process which implies the ineffectiveness of the company. Unpunctuality may hurt
the company’s reputation and long-term operation.
Finance department problems:
The financial department is responsible for accounting for the daily financial situation
of the company, participating in the daily capital operation of the company, and
ensuring the normal financial operation of the company. For this company, the
finance department is currently using two different systems (Kang Tai system and
Yongyou software) to complete the entire financial process. Using the ‘Kang Tai’
system for cost accounting and recording current tickets transactions. However, the
overall company-wide financial settlement, such as net profit closing and taxation, is
handled through the ‘young you’ software. This leads to incomplete integration of the
‘Kang Tai’ systems as well as cross-software processing of information has reduced
the synchronization and accuracy of data.
Human resources department problems:
Low efficiency of administrative approval. Low efficiency of administrative
examination and approval leads to waste of resources. For example, other departments
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have more tasks and need more staff, but the human resources department fails to
adjust the number of staff in time and increase labor support for other departments,
resulting in low efficiency. In addition, the number and time of overtime work are not
reasonable, resulting in a lot of negative emotions among employees. Furthermore,
the mismatch of unemployment and skills is also a problem.
2. Solution Explorations (Phase 2)
Here in this chapter, we would like to contrast two proposals that have been put
forward in the internal meetings. The first one is to optimize the existing system——
Kang Tai system, which is an elementary ERP system. Another one is to introduce a
mature ERP system——SAP, which has been evaluated through the market survey.
2.1 Optimization of Kang Tai system
The optimization of Kang Tai system should be implemented by modules and
departments. Based on the existing problems in each department presented before,
they can be concluded into three aspects:
1. The financial system is separated.
2. Input of information should be conducted manually; crisis of error occurs.
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3. The immaturity of EDI.
4. Complexity of the approval of administrative items.
To optimize the system and address the problems, it requires Kang Tai to implement
such improvements:
1. Develop its own financial function, and optimize it into an aggregated ERP
system.
2. Introduce RFID into the system. This technical method can help reduce the
potential stress that lies in both the storage and logistics department and
thus enhance the efficiency of the whole business process.
3. Apply AI combined with RFID to cut down the requirement of manual
operation which is essential for the logistics department to avoid the
mistake related to the seal strip which will greatly affect the efficiency.
Further, it can also help the company to ease other stress of the workers in
other departments.
4. Although the Kang Tai system has already provided the function of EDI to
facilitate the company to exchange, track and share information with its up
and down stream, it is immature. While the outbound orders information
needs to be exported, there always reported errors which means the EDI
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cannot connect with other ERP systems that the company’s corporation
partners are using. So improving the collocation degree of EDI is another
vital aspect of the optimization.
5. An OA system is required to resolve the complexity of the approval of
administrative items which can help simplify the administrative flows. The
human resource function in the Kang Tai system currently can only
display basic information and handle simple situations.
After proposing the requirements to Kang Tai, the company had provided its
feedback to us. According to the feedback from Kang Tai, it can provide the company
with the RFID, OA system and inserted financial system but has other drawbacks.
The pros &cons are listed as follows:
Pros: 1. No need for excessive training of the staffs.
2. Save time for installation of new system.
Cons: 1. The customization is costly and need a long lead time.
2. Since Kang tai is not a leading company in the ERP providers, it
cannot satisfy the need for AI and EDI. Both these techniques need huge capital
investment to develop.
2.2 Selection SAP system
SAP is the world’s leading ERP system. The functions of SAP system include
enterprise finance, procurement, inventory, production and sales, human resources
management, etc. They can be used alone or in combination with other solutions.
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2.2.1 Financial module
The financial module of the ‘Kang Tai’ system used by Shanghai U-Express
International Logistics company can only complete cost accounting and record current
Tickets transactions. Asset management, business planning, cost management, tax,
and so on in the financial process need to be completed on the ‘Yonyou’ system. The
financial system of SAP covers financial accounting, management, and decisionmaking. The financial accounting module (FI), control module (CI), and enterprise
control module (EC) in SAP finance can solve the financial business that the ‘Kang
Tai’ system cannot complete. In addition, SAP finance also includes a business data
warehouse and enterprise strategy management module, which can analyze the
current business situation of the company and help the company’s senior management
to make decisions (Gao,2020). Therefore, the financial module of the SAP system can
realize the completion of the financial process on one system, and avoid the
phenomenon of delayed information transmission and transmission error caused using
two systems.
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2.2.2 Introduce RFID technology into SAP
The information of the warehousing department, business department, and logistics
department of Shanghai U-Express International Logistics company need to be
manually input, and the error of manual input will bring the loss of time and cost to
the company. SAP provides radio frequency identification (RFID) solutions for
supply chain management, helping enterprises manage read and write data through
RFID tags, reducing manual input errors, and taking supply chain management to the
next level. SAP’s RFID solution was launched in 2004(Kuaikeji,2004), Compared
with RFID implementation solutions of other small ERP companies, SAP’s solution is
optimized, mature, perfect, as well as a leading position in the industry. The
introduction of RFID technology into the SAP system, the use of RFID to make goods
automatically in and out of storage, reduce the time and error rate of data input,
reduce labor costs and time costs, improve the real-time and sharing of information,
as well as can improve the brand image of the enterprise.
2.2.3 Human Resource module
The function of the human resource module of the ‘Kang Tai’ system used by
Shanghai U-Express International Logistics company is not perfect, failing in the
human resources department to timely, accurately, and categorically record the needs
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of each department, inefficient approval as well as untimely recruitment of staff. The
human resource module of the SAP system is a complete system, which can use a
wide range of functions, including recruitment management, training management,
time management, performance evaluation, and salary management (Li,2020). For
example, in the recruitment management module, the system can judge whether the
job demand and the applicant’s job intention match according to the previous data set.
Besides, after signing the labor contract with the new employee, the system will
convert the data of the applicant into the data of the employee, which greatly saves
time and improves efficiency. In the time management module, the SAP system can
timely and accurately record the situation of employees, such as attendance,
absenteeism, overtime, sick leave, to effectively link-time management with
performance appraisal and salary. The SAP system has expanded the functions that
the Kang Tai system did not have, and made every business of the human resources
department standardized, integrated the human resources information of various
departments, and improved the approval efficiency of the whole company.
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2.2.4 Pros and Cons of using SAP
Introducing SAP system has some pros and cons, advantages include:
1. The functions of the SAP system are more comprehensive.
2. SAP system is one of the leading ERP systems in the world, which is relatively
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guaranteed in quality and safety, for example, there are guarantees in EDI to reduce
the probability of errors.
3. SAP is a mature system and will save time in terms of installation.
4. SAP has a more complete and professional training system, which is convenient for
employees to get familiar with quickly.
Disadvantages include:
1. The price of post-maintenance is a little high.
2. There are many functions involved and the company may need to consult different
consultants.
2.3 Overall Comparison
In order to address the problems with the existing system, we have proposed two
options, one is to optimize the Kang Tai system and the other is to introduce SAP
system replace the existing system. Next, this report compared the functionality, cost
and time of the two options use a table.
Function
Introduce SAP system
Upgrade Kang Tai system
Financial module
General Ledger

Accounts Receivable

Accounts Payable Module

Assets

Cost Centre Accounting

Product Cost Control

Debt Collection Management

Business plan and consolidation

Business Intelligence Analytics

RFID technology
Introducing RFID Technology
Launched in 2004, a
Not implemented
mature solution
previously
Human resource module
Vacancies Received

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Automatic CV Screening

Converting Candidate Data into Employee Data

Record Employee Status (leave of absence,
overtime)
Automatic Performance Calculation

Cost
Upgrading the Kang Tai system more expensive than introducing the SAP system, as it requires the
development of new features, while the SAP functions are already mature.
Time
Upgrading the Kang Tai system requires a longer lead time than introducing the SAP system. This is
because Kang Tai takes a longer time to develop new functions, whereas SAP is well established. In
addition, the lack of maturity of Kang Tai’s technology can also cause longer development times.
Safety
The SAP system is one of the world’s leading ERP systems, therefore its quality and security are relatively
assured.
Professionalism
SAP is more professional in terms of technology and personnel compared with optimizing Kang Tai
system.
In summary, the advantages of introducing the SAP system compared to an optimized
Kang Tai system are as follows.
1.The functions of the SAP system are more comprehensive.
2. Save time and money cost.
3. SAP system is one of the leading ERP systems in the world, which is relatively
guaranteed in quality and safety, for example, there are guarantees in EDI to reduce
the probability of errors.
4. SAP has a more complete and professional training system, which is convenient for
employees to get familiar with quickly.
2.4 Final Selection
After comparison, the company considered the factors of function, cost, time and
professionalism, finally decided to introduce the SAP system to replace existing Kang
Tai system.
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3. Implementation (Phase 3)
3.1 Implementation Process and Methodology
Through comparison, we selected SAP as the replacement system for the renovation
and optimization, and then developed a one-year implementation process and plan
based on the solution, which can be seen in the above diagram.
First, we plan to complete the overall detailed project plan this month (March 2022)
and ensure the completion of the SAP system installation and the formation of the
team responsible for this implementation project by the end of the month. In April, the
newly formed project team will be trained so that they can have a fuller understanding
of the existing system as well as a better understanding of the SAP system to enhance
its operation. After the project team has fully mastered the use of the new system, we
have decided to conduct implementation experiments first for individual departments
of the company, most likely the warehouse department, to understand the impact and
effect of the system in the current department by being the first to use the new system.
The data from the test was carefully recorded and documented for comparison with
the data from the previous system to ensure that the new system was really solving the
legacy problems and bringing benefits to the departments. We have decided that this
data recording and documentation cycle will take about five months, and towards the
end of the year (Nov 2022) we plan to start training more employees to become
proficient in the new system to ensure that most employees are aware and ready to
work with the sap system by 2022. At the end of the year, we will migrate all
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company data from the old system to the new system by 2023. In the last two months,
the company will conduct a final review of the new system to ensure that it is truly
effective.
3.2 Risks and difficulties
3.2.1 Internal risks:
Employees are unfamiliar with the new system, resulting in errors.
Employees do not want to make changes.
Resulting increase in employee workload (affects employee morale)
Business processing during the replacement of the old and new systems
3.2.2 External risks:
The impact of the epidemic.
Inefficiencies due to home office
ERP rectification process exceeds expectations.
Expenses exceeded budget.
3.3 Methods to alleviate
Provide additional help and avenues to answer questions, such as help groups, for
employees who have difficulty familiarizing themselves with the new system.
Provide additional encouragement and incentives to reduce employees’ reluctance to
use the new system and increase their motivation.
Assign business to a dedicated person during the replacement of the old and new
systems to ensure that business processes are error-free.
Encourage communication and interoperability, actively communicate problems that
arise and resolve them in a timely manner.
Develop a dedicated budget program to ensure that final expenses are within
manageable limits.
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3.4 Impact of the rectification program
The alternative solution, when implemented, will at least address the high error rate of
existing manual information entry, as well as the maturity of the finance department
and EDI system.
Ultimately, it will reduce error rates, improve efficiency and service to customers, and
enhance service quality and corporate profitability.
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Reference:
Gao, L.X. (2020). Learn SAP finance from simple to deep. Posts and Telecommunications Press.
Li, X. (2020). Human resource management information System Practice: SAP. Southwestern
University of Finance and Economics Press.
Kuai
Keji.
(2004,
March
10).
SAP
launches
first
RFID
solution.
https://news.mydrivers.com/1/19/19099.htm
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