Company Overview
Discuss about the impact of ERP systems on business operations of Coca Cola Amatil.
Digitalization approach has been capturing organizations in all over the world. Various businesses have been depending on technology for helping them for enhancing their business processes. Data and information has been an important asset for any company in the market. Resources of a company need to be properly managed and accessed (Zach, Munkvold and Olsen 2014). This report has focused on Coca Cola Amatil, Australia. The problems and challenges in the business operations have been discussed in the report. The implementation of ERP systems in the company have been explained in the report. Solutions provided by the implementation of ERP systems in the company have been discussed in the report. The purpose of the report is address impact of ERP systems on business operations.
Coca Cola Amatil is one of the largest distributors and bottlers of non-alcoholic ready to drink beverages in the Asia pacific. There are 14,000 employees working in Australia, New Zealand, Fiji, Papua New Guinea and Indonesia. The company has been working diversely group in six different countries. The company has accessed around 270 million consumers more than 950,000 active customers in the market. The company has a huge product range including spring water, soft drinks, sports and energy drinks, fruit juices, flavored milk, beer, tea and packaged vegetables and snacks. Therefore, the consumers of these products have been increased gradually.
The mission of the company is to refresh body, spirit and mind of all people in the world and inspiring moments of happiness and optimism by their brands and actions. The vision of the company is to achieve the goal that has been set for development of company. The company has focused on its leadership values in their team for shaping a fruitful future.
Enterprise Resource Planning (ERP) systems have been helping in shaping future of the businesses in the market. However, ERP has played a major role in improvising computing. The implementation of ERP has been helping in increasing the speed of information flow in the organization (Shatat 2015). The ERP system in the Coca Cola Amatil has been helping in minimizing issues faced by the company in market. The use of ERP system has been standardizing processes within this organization.
The communication system of the company has been linked with the CCA system in various respect. Various vendors and systems have been extremely tight deadlines for completing any project in the company (Rajnoha, Kádárová and Kádár 2014). Resources of company have been misused in various purposes as they were no proper planning in their systems. Therefore, quality of projects done by the company have been degrading in recent years. This have been creating problem for the company in the market. The quality of products has been decreasing in the market. Therefore, there has been challenges created due to this factor in the company (Leyh and Sander 2015). The company has decided to implement the ERP systems in the operations for maintaining a keen approach to the development of organization in the market. An ERP system is a complete integrated business management system that helps in in covering functional areas of the company including the logistics, finance, production, human resources and accounting. It helps in organizing and integrating operation processes and data flow. For making an optimum use of the resources, various management systems in the company. There has been various opportunities created with implementation of ERP systems in the IS/IT sector of company. The interventions in the company have been maintaining an appropriate approach to the development of company in the market. The market of ERP systems shave been growing gradually that has covered SMEs and big companies. In this case, Coca Cola has been defending market analyses report in order to make profit in the market (Ali and Miller 2017). The use of ERP systems has helped in gaining competitive advantages by improving business performance. The integration of supply chain management and inventory management in company have helped in enhancing the decision making system for supporting strategic goals. The top management of company needs to be supportive to the implementation of the ERP systems.
Enterprise Resource Planning
ERP systems helps in facilitating in the horizontal and vertical integration of the business in the market. The ERP systems have two distinct features including causal connection between the software implementation procedure and the business approach and ensuring the data integrity, integration and security of the data and information in the company. The implementation of the ERP system in Coca Cola has been a time taking process (Jagoda and Samaranayake 2017). The ERP system has to be integrated in each of the business processes of the company. However, the implementation of ERP systems might increase budget of the company in the market. Therefore, the price of the products in the market might get increased as the manufacturing cost of the company get increased. The benefit of the ERP systems can be observed in the operations only of it is properly implemented in each of the business approaches. Stakeholders of the company goals an important role in implementing the ERP systems in the company. The stakeholders of the Coca Cola Company have been encouraging and motivating the operations for implementation of ERP in the company (Sykes 2015). The motivation provided by the stakeholders have been helping in growth of company in the market. Adoption of ERP systems by company have helped in meeting strategic needs and tactical consideration sf the employees and customers in the market. The company. It helps in organizing and integrating operation processes and data flow. For making an optimum use of the resources, various management systems in the company.
There has been various opportunities created with implementation of ERP systems in the IS/IT sector of company. The interventions in the company have been maintaining an appropriate approach to development of company. The market of ERP systems shave been growing gradually that has covered SMEs and big companies. The company size plays a tactical role in the development of the ERP systems in the company. Large companies including Coca Cola helps in employing more ERP systems s as compared to the small companies. The use of ERP software including SAP have helped in maintaining the business processes of the company. In this case, Coca Cola has implemented SAP as an ERP software in the company (Chou et al., 2014). This have helped managing the financial documents and assets of company in the market.
The implementation of SAP software have been hoeing in incremental approach towards the development of company in the market. The SAP software has helped in analysis the cost benefit approach in market (Chang et al. 2015). Therefore, revenue invested in market by the company can be tracked. The profit and loss statement of the company can be prepared easily with the help of the SAP software. The supply chain management system of the company I also handled by the SAP software. This management helps sin satisfying customer in the market.
Cost Benefit Analysis of the Coca Cola Amatil
The cost benefit is the comparison of costs and benefits of goods and services provided by the company in market. This analysis helps in maintaining budget of company in market. The IT management of company has been enhanced by use of the SAP software. The cost benefit process has been integrated with the SAP software that provide technical perspective to the calculation of the costs and revenue model of the company.
|
Cost benefit analysis |
||||||
|
Year 0 |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
|
Profit |
$0 |
$25,000,000 |
$25,000,000 |
$30,000,000 |
$30,000,000 |
$40,000,000 |
|
Decrease in expenditure |
$0 |
$1,000,000 |
$1,000,000 |
$1,000,000 |
$1,000,000 |
$1,000,000 |
|
Development cost |
($20,000,000) |
($500,000) |
($500,000) |
($500,000) |
($500,000) |
($500,000) |
|
Capital Expenditure |
$0 |
($10,000,000) |
($10,000,000) |
($10,000,000) |
($10,000,000) |
($10,000,000) |
|
Annual Expenses |
$0 |
($15,000,000) |
($15,000,000) |
($15,000,000) |
($15,000,000) |
($15,000,000) |
|
Net cash flow |
($20,000,000) |
$500,000 |
$500,000 |
$5,500,000 |
$5,500,000 |
$15,500,000 |
|
Discount factors |
||||||
|
Discount rate |
5% |
|||||
|
Year Index |
0 |
1 |
2 |
3 |
4 |
5 |
|
Discount factor |
1 |
0.95 |
0.91 |
0.86 |
0.82 |
0.78 |
|
Discounted flows |
||||||
|
Cost |
($20,000,000) |
($24,285,714) |
($23,129,252) |
($22,027,859) |
($20,978,913) |
($19,979,917) |
|
Benefit |
$0 |
$24,761,905 |
$23,582,766 |
$26,778,966 |
$25,503,777 |
$32,124,573 |
|
Net |
($20,000,000) |
$476,190 |
$453,515 |
$4,751,107 |
$4,524,864 |
$12,144,656 |
|
Cummulative |
($20,000,000) |
($19,523,810) |
($19,070,295) |
($14,319,188) |
($9,794,324) |
$2,350,331 |
|
Net present value |
$2,350,331 |
|
Feasibility study |
|||
|
Forecasted revenue |
|||
|
Units sold |
Average |
Annual revenue |
|
|
Product 1 |
255 |
125.00 |
31,875.00 |
|
Product 2 |
450 |
100.00 |
45,000.00 |
|
Product 3 |
230 |
65.00 |
14,950.00 |
|
Product 4 |
530 |
25.00 |
13,250.00 |
|
Total of forecasted revenue |
105,075.00 |
||
|
Cost of goods sold |
|||
|
Expected |
Annual cost of |
||
|
Product 1 |
25% |
7,968.75 |
|
|
Product 2 |
25% |
11,250.00 |
|
|
Product 3 |
25% |
3,737.50 |
|
|
Product 4 |
30% |
3,975.00 |
|
|
Toatl cost of goods sold |
26,931.25 |
||
|
Annual maintenance, repair and overhaul |
|||
|
Factor (%) on capital equipment |
15% |
||
|
Asset depreciation |
|||
|
Number of Years |
5 |
||
|
Tax |
|||
|
Annual Tax Rate |
30% |
||
|
Inflation |
|||
|
Annual Inflation Rate |
2% |
||
|
Product price increase |
|||
|
Annual Price Increase |
2% |
||
|
Funding |
|||
|
Loan Amount |
50,000.00 |
||
|
Annual interest rate |
5.00% |
||
|
Term of loan (months) |
60 |
||
|
Monthly rate |
0.41% |
||
|
Payment |
941.02 |
||
|
Total Amount Payable |
56,461.20 |
|
2017 ($M) |
2016 ($M) |
Variance % |
|
|
Trading revenue |
2,535.2 |
2,621.2 |
(3.3) |
|
Trading revenue per unit case |
8.15 |
8.22 |
(0.9) |
|
Volume (million unit cases |
311.1 |
319.0 |
(2.5) |
|
Underlying earnings before interest and tax |
412.6 |
440.9 |
(6.4) |
|
EBIT margin on trading revenue |
16.3% |
16.8% |
(0.5) points |
|
Return on capital employed |
36.1% |
38.7% |
(2.6) points |
|
Volume summary – unit cases |
|||
|
Sparkling |
|||
|
Beverages |
206.7 |
213.6 |
(3.2) |
|
Frozen |
25.2 |
22.9 |
10.0 |
|
Stills |
79.2 |
82.5 |
(4.0) |
|
Total |
311.1 |
319.0 |
(2.5) |
(Source: Coca Cola Amantil, 2018)
The above tables shows about cost and benefit of the company in 2016 and 2017. The revenue of the company has been decreased 3.3 per cent and volume decreased by 2.5 in year 2017. The EBIT declined 6.4 per cent in the year. Revenue, EBIT and volume trajectory has been improved in the second half (Supramaniam, Abdullah and Ponnan 2014). The competitive pressure in Coca Cola and Water categories, a shift has been continuing in channel mix away from state of consumption channel (Abdinnour and Saeed 2015). In sparkling beverages, volume has been declined 3.2 per cent for the year. However, there was an improvement of the 3.8 per cent has been declined in the first half.
During 2017, the company has been focusing in the South pacific region for accelerating Australian Growth Plan. However, the plan has been focusing in the development of the portfolio in order to route-to-market strategy (Alles, Brennan Kogan and Vasarhelyi 2018). The cost optimizing policy of company has been helping in maintaining the cost and benefit from revenue. In year 2018, the company has been focusing in the cost optimizing plan for the development of the company in the market. There has been some of the critical factors that might help in maintaining the success of the implementation of the SAP software in the company. These factors include ERP teamwork and composition, Study well, Support from top management, proper project management and monitoring and evaluation.
Conclusion
It can be concluded that the ERP system of the company has been helping in enriching the development of the company in the marmite. Various problems in the operation of the Coca Cola Amatil has been discussed in the report. The implementation of the SAP software in the ERP system has been explained in the report. The company size plays a tactical role in the development of ERP systems in company. The use of ERP software including SAP have helped in maintaining business processes of company. The performance of company in the market has been increased in recent years. The use of the SAP software has been helping in maintaining the cost benefit analysis of the company. Large companies including Coca Cola helps in employing more ERP systems s as compared to the small companies.
References
Abdinnour, S. and Saeed, K., 2015. User perceptions towards an ERP system: Comparing the post-implementation phase to the pre-implementation phase. Journal of Enterprise Information Management, 28(2), pp.243-259.
Ali, M. and Miller, L., 2017. ERP system implementation in large enterprises–a systematic literature review. Journal of Enterprise Information Management, 30(4), pp.666-692.
Alles, M., Brennan, G., Kogan, A. and Vasarhelyi, M.A., 2018. Continuous monitoring of business process controls: A pilot implementation of a continuous auditing system at Siemens. In Continuous Auditing: Theory and Application (pp. 219-246). Emerald Publishing Limited.
Almajali, D.A., Masa’deh, R.E. and Tarhini, A., 2016. Antecedents of ERP systems implementation success: a study on Jordanian healthcare sector. Journal of Enterprise Information Management, 29(4), pp.549-565.
Bento, R., Bento, A., Bento, A. and ISTM, M., 2015. How fast are enterprise resource planning (ERP) systems moving to the cloud. Journal of Information Technology Management, 26(4), p.35.
Chang, B., Kuo, C., Wu, C.H. and Tzeng, G.H., 2015. Using fuzzy analytic network process to assess the risks in enterprise resource planning system implementation. Applied Soft Computing, 28, pp.196-207.
Chou, H.W., Lin, Y.H., Lu, H.S., Chang, H.H. and Chou, S.B., 2014. Knowledge sharing and ERP system usage in post-implementation stage. Computers in Human Behavior, 33, pp.16-22.
Coca Cola Amantil, 2018. Annual Report, Retrieved from https://www.ccamatil.com/-/media/Cca/Corporate/Files/Annual-Reports/2018/Annual-Report-2017.ashx.
Jagoda, K. and Samaranayake, P., 2017. An integrated framework for ERP system implementation. International Journal of Accounting & Information Management, 25(1), pp.91-109.
Leyh, C. and Sander, P., 2015. Critical success factors for ERP system implementation projects: An update of literature reviews. In Enterprise Systems. Strategic, Organizational, and Technological Dimensions (pp. 45-67). Springer, Cham.
Rajnoha, R., Kádárová, J., Sujová, A. and Kádár, G., 2014. Business information systems: research study and methodological proposals for ERP implementation process improvement. Procedia-social and behavioral sciences, 109, pp.165-170.
Shatat, A.S., 2015. Critical success factors in enterprise resource planning (ERP) system implementation: An exploratory study in Oman. Electronic Journal of Information Systems Evaluation, 18(1), p.36.
Supramaniam, M., Abdullah, A. and Ponnan, R., 2014. Cost analysis on ERP system implementation amongst Malaysian SMEs. International Journal of Trade, Economics and Finance, 5(1), p.72.
Sykes, T.A., 2015. SUPPORT STRUCTURES AND THEIR IMPACTS ON EMPLOYEE OUTCOMES: ALongitudinal FIELD STUDY OF AN ENTERPRISE SYSTEM IMPLEMENTATION. Issues, 11401.
Sykes, T.A., Venkatesh, V. and Johnson, J.L., 2014. Enterprise system implementation and employee job performance: Understanding the role of advice networks. Mis Quarterly, 38(1).
Zach, O., Munkvold, B.E. and Olsen, D.H., 2014. ERP system implementation in SMEs: exploring the influences of the SME context. Enterprise Information Systems, 8(2), pp.309-335.
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