The Application of AHP in Biotechnology Industry with ERP KSF Implementation

Transcription

1 The Application of AHP in Biotechnology Industry with KSF Implementation Ming-Lang Wang 1, H. F. Lin 2, K. W. Wang 2 1 Department of Industrial Management, Chung Hua University, Hsinchu, Taiwan 2 Department of Technology Management, Chung University, Hsinchu, Taiwan (marlon@chu.edu.tw 1 ) Abstract - This research focused on the production of Phalaenopsis, particularly in its of enterprise resources planning, dimensions and the adoption of AHP (Analytical Hierarchy Process.) The importance of assessment index and its attributes were reviewed. The results from this research have shown that factors that led to the incorporation of Key Success Factor in the Biotechnology Industry (KSF) were employees training, the full support from executives in system integration, communication with company, assistance in training and technology transfer, real-time and system accuracy and efficiency and flexibility in resources allocation. The results from this study will benefit the Biotechnology industry in understanding the important factors that contributed to the success of, and thus is instrumental for the development of products and marketing strategies. It serves as a reference for breaking into the renovation market. Keywords - Enterprise Resource Planning (); Key Success Factor (KSF); Analytical Hierarchy Process (AHP) I. INTRODUCTION The application of system is very complex and relies on background and motivation. Performance management and analysis of the KSF are required to ensure successful application of the system in the biotechnology industry. To cope with the competitive orchid market in Taiwan in the future, it is necessary to reduce capital, increase profit and enhance competitiveness. The objective of this study is to explore enterprise resource planning in the KSF-Biotechnology industry for effective integration of system. A clear picture of will promote biotechnology industry's market. Based on the abovementioned research backgrounds and motives, this sturdy is intended for realizing the following purposes 1) To consolidate and summarize the literature of KSF of SYSTEM ; 2) To understand the KSF of SYSTEM ; 3) To understand the difficulties and obstacles encountered at each stage of system and solution to overcome. II. LITERATURE REVIEW /12/$ IEEE A. Enterprise Resource Planning System is short for Enterprise Resource Planning, conceptualized by the Gartner Group in the early 90 's. Davenport (1998) had viewed as a technology for enterprise information integration with a simple database as its core. The database pools and processes various commercial activities within the enterprise according to the functions, department and regions. Through the internet it creates a network for data sharing and supports application modules to comply with policies, organizational characteristics and corporate culture. The integration of system can maximize efficiency in planning, management, control and utilization of corporate resources. B. Key Success Factor Daniel (1961) was one of the first to propose the concept of Key Success Factor (KSF) or critical success factor. It was highlighted that the success of most industry is determined by three to six factors, such are known as the KSF. KSF after which economist Commons (1974) referred to as the "limiting factor" and had the concept applied in economy management and negotiation. Thereafter Barnard (1976) applied the concept in management decision making theory. He considered the analysis required for decision making was essentially looking at "strategic factors". In addition, Tillett (1989) applied the concept of strategic factors to dynamic system theory. He viewed that the ample resources of an organization was the key factor. Policies were established to maintain and ensure maximum utilization of resources. In addition, they were important in resources forecast. KSF is the top priority in industrial analysis. It is important in the management of control variables, as well as the source of competitive advantage. In recent years, policy management has overtaken information system management which was the main focus in earlier research. KSF has thus being applied in areas beyond information system management. C. The Blue Gold of Biotechnology industry Phalaenopsis Taiwan is known as the kingdom of orchids. The suitable climate, environment and along with government policies and effort in related measures have placed Taiwan s orchid industry in a pivotal position in the international arena. The sales of Phalaenopsis, Oncidium and Paphiopedium (from Xinxing) rank first in the world.

2 The production process of Phalaenopsis is divided into three stages. The upstream development involves development and species identification, breeding, propagation; the middle stream carries out domestication, small seedlings, medium seedling, large seedling, growing and harvesting; while logistics, marketing and branding are steps in the downstream pathway. The application of key technology and its importance varies among the three production stages. At upstream, the value-added of breeding and seedling is higher than development, identification and seedlings. In the middle stages, the value-added of the flowering and seedling stages is higher than growing, harvesting and domestication. While in the downstream stage, the value-added of logistics, channels, brand and marketing is higher than cash flow and information flow. With government guidance, the production of Phalaenopsis has moved toward mass production. The stringent computerized monitoring on production and cultivation management, in addition a large demand from the domestic and international market has led to the expansion of the production lines across cities and nationwide. Apart from "Taiwan Orchid bio Park", the national orchid industry has also established the Taiwan Orchid Growers Association (TOFA), which aims to promote production and sale of orchids, to develop domestic and foreign markets, to improve marketing strategy and to assist Taiwanese government in policy making for the flora industry. III.METHODOLOGY A. Brief Description and Purpose of AHP The purpose of AHP analysis is to simplify complex problems into elementary hierarchy system. It gathers scholars, experts and decision makers at all levels for comparison between pairs of elements, also known as Pair wise Comparison. Upon quantization, comparative matrix pairs (Pair wise Comparison Matrix) is established according to the matrix of eigenvectors (Eigenvector). Thereafter the elements of the vector are employed to establish a hierarchy of priorities and thus finding the largest eigenvalue. This value provides a reference point for policy makers in decision making by assessment of the relative strength between the Pair wise Comparison Matrix consistency indexes. The consistency index is made up of at least two levels, while AHP links all levels in deriving the AHP hierarchy among the various factors of relative priority and strength. This is followed by AHP connecting all the Consistency Index and Consistency Ratio before the final evaluation of the high and low levels consistency of the hierarchy. was mentioned that the basic assumptions of AHP analysis included 9 of the following: 1) A system can be broken down into a number of classes or components to form a network-level structure. 2) Each level is assumed independent within the hierarchy. 3) The factors within each level make use some of or all of the factors in the level above for assessment and evaluation. 4) Absolute values can be converted to a Ratio Scale in comparative assessment. 5) Regular matrix can be employed after Pair wise Comparison. 6) Preferential relations satisfy transitivity. 7) Consistency level needs to be measured in case of transitivity. 8) The degree of advantage of factors is evaluated by the Weighting Principle. 9) For elements that appear in the class structure, they are considered and assessed as a whole structure (regardless of their strength), rather than of independent of review class structure. C. Design of a Questionnaire To study the KSF and their role in, the questionnaire was divided into two part 1) First Stage Questionnaire: (1) Target audience: the junior and middle management level of companies involved in system ; (2) The company s key success factors of. 2) Second Stage Questionnaire: (1) Target audience: the junior and middle management level of companies involved in system; (2) The part was based on the first part and had the factors that contributed to the success of analyzed. 3) The aim was to seek the relative importance of KSF : (1) the motive behind companies in ; (2) The second level as the measurement index: the four dimensions: internal factors, system features, software support, results followed by ; (3) Third level gauged the KSF of second level indexes. D - Research Structure B. Hypothesis of AHP In "The features and application of hierarchy analysis method "by Deng Zhengyuan, Zeng Guoxiong (1989), it

3 KSF Internal factors system software support Results from Fig. 1 Research structure. RESULTS 1. The determination of executives in 2. A highly effective team across department 3. project team allowed full authorization 4. progress 5. Communication between project team and departments 6. Staff training 7. Department acceptance in system 1. Cost of system set-up and time 2. System integration capability 3. Flexibility in modification 4. System for modular design 5. Interface that provides ease of use 6. Accuracy and real-time 1. Real-time response service 2. Assists companies in staff training, and technology transfer 3. Expertise demonstrated by vendor 4. Equipment provided by vendor 5. Understanding the needs of user 6. Communication with company Reduced operating costs 2. Increased flexibility and efficiency in resources allocation 3. Increased resources availability in real-time 4. Smooth purchase process A. Analysis and Results of First Stage Questionnaire This section covered the first stage of the analysis. Its target audience was the junior and middle management level of the companies that was involved in successful system integration. Out of the total of 20 questionnaires issued, 14 were received. Of those received 13 were valid questionnaires after omitting one that was incomplete (70% completed). Likert s five-point level score system was used for data mining. The reliability of this study was summarized by Cronbach ' s coefficients where the reliability of the four dimensions in fell within the range of 0.50<.< It is thus a good indicator of the research s reliability and value. B. Analysis and Results of Second Stage Questionnaire 1) Subjective measurement of AHP analysis Cconsistency ratio (C.R.) was subjected to ensure questionnaire answers lie within the valid range in a consistent manner. The measurement of the consistency ratio in each level was found to be less than 0.1 in all the levels, whether as a whole factor (first level), internal factor (second level), system features (third level) or the software support. The C.R values were listed in Table I. Results has shown the factors within the hierarchy were closely related and consistent. Since there were only two factors for comparison in the second level, it was found to be consistent (A>B or A<B) and hence no calculation was required. In conclusion, C.R was not applicable in the results of. TABLE I THE CONSISTENCY RATIO IN SECOND STAGE OF QUESTIONNAIRE Dimension Consistency Ratio (C.R.) Whole factor Internal factor of the company system features software support Results from Consistency not required 2) Compound weight analysis In "KSF research on the chain of cafés [5], it was mentioned that hierarchy weighing is also known as local priority which refers to relative comparison of weight between each level. The overall weight is known as Global Priority, which is the weight of the level above (second level) multiplied by the factors in the current level (third level). This is to display the impact of the factors in the current level (third level) have on the entire evaluation. Therefore based on the results from the four dimensions, the compound weights were listed in table 4-16 and ranked in order of importance. For better clarity, the values were multiplied by 100. For example: compound weight (c) = second level weight (a) * third level weight (b) *100 %.

4 (Second level) Level/ Dimension TABLE COMPOUND WEIGHT ANALYSIS OF KSF FROM IMPLEMENTATION Compound (Third level) Weight % (c)= (a)* (b)*100% Weight Question (Index) Weight (b) (a) Internal Factor Determination of executives in A highly effective team across department Importance Progress of team Staff training and education System features Cost of system set-up and time System integration capability Accuracy and real-time software supply Real-time response service Assist company in staff training and technology transfer Communication with company Results from Reduced operating cost Increased flexibility and efficiency in resources allocation V. CONCLUSION The main focus of this study was to identify the Key Success Factors and its level of importance in. This was carried out successfully through AHP analysis as well as the survey from questionnaire which was designed based on interviews and literature review. The factors of in the company were consolidation in TABLE III. TABLE III FACTORS OF IMPLEMENTATION KSF Level/Dimension Level/Dimension (A6) Staff training and education Internal factor (A2) Determination of executives in Internal factor (C6) Communication with company software support (C2) Assist company with staff training and technology transfter software support (B6) Accuracy and real-time system features (D2) Increased flexibility and efficiency in resources allocation Results from (A4) Progress of team Internal factor (C1) Real-time response service software support (B2) System integration capability system features (D1) Reduced operating cost Results from (A2) A highly effective team across department Internal factor (B1) Cost of system set-up and time system features In recent years a number of 4~6 KSF was usually considered by most researchers. Therefore, in this case study, the focuses were placed on the first 6 KSF. 1) Staff training and education: As the company in this case study is a traditional industry, the employees were not as highly educated and most did not possess computer skills. Therefore the company had invested a considerable amount of time in conducting training courses. Their staff training and education were divided into two main stages (1) he team of E- training. They were mainly responsible for system maintenance, program modifications, and as training instructors. In addition to basic knowledge, the E- team was required to work with the software vendors in training courses; (2) The company was responsible for part of their training courses. The courses were planned in conjunction with the. A 30-hour course was planned according to the work system. The E- team members served as lecturers and all system users were required to undergo training in a classroom setting during nonworking hours. The course aimed to resolve issues encountered and provide solutions. It also provided an

5 opportunity to understand and improve the system. At present, the company continues to conduct staff training and assessment. The assessment would serve as an encouragement for the staff and accelerate their learning curve. The company s executives estimated an additional year is required for staff training and full system integration. It remains one of the company s future goals to have everyone familiarized with the operating system. 2) Determination of executives in. The company first implemented the system in The decision to implement was proposed by the executives through meetings. However, due to lack of support from the senior management and hence lack of funding by the company, the project was shelved. In 2001, Taiwan officially became a member of WTO in the 144th meeting. The influx of large scale manufacturing companies and consulting firms in Taiwan had led to a perspective change. To enhance competitiveness, the senior management of the company had decided to reincorporate the system with the full support of budget. 3) Under the impetus of the executives, staffs were trained to work with the new system. Staffs that refused change had to be let go. With full budget support and authorization given by the top management, E-team was able to focus on all steps and methods of and had complex issues resolved. Therefore the support from the executives was the main crucial success factor. 4) Communication between the software vendor and company. The company is this case study differs from other manufacturing industries. It had to rely on customized software. The company spent almost a year working with the software vendor in building a customized system. Meetings were held between the parties of the E-team members, representatives from every department and the software vendor. Every one to two weeks pre and during the period, meetings were held. The meetings were changed to once a month upon and finally to only emergency situations. software vendors to assist companies in training and technology transfer. From the factor of software vendor features, the company in this case study has placed less priority on the training and technology transfer. The services provided by the software vendor were as follows: (1) To provide professionals in staff training and to arrange training in system conversion. Tailor training courses to meet customers needs; (2) To carry out an assessment on the old system before determining the means of data transfer (The system requires Windows 2000 Server operating systems, server software: Tomcat, programming languages: Java, database: Oracle 9i). The E-team was responsible for data transfer operations which was followed by data integration data into the E4RP system by the software vendors. 5) Accuracy and real-time system. The progress of the system could be monitored through network and video systems (cameras). Through real-time monitoring, effective quality control and work progress could be ensured. Officials could also depend on the system database to identify problems should they occur during construction. 6) Flexible and efficient allocation of resource. One of the biggest results upon was increased flexibility and allocation of resources, hence more efficient business operations. A. Limitations 1) The company in this case study is a single case company. The key factors for mentioned here may not apply in the nonconstruction industry. Therefore, there may be limitation on the scope of the findingsthe similar research method is applicable to another industry (e.g., semiconductor industry) to find any same or distinct conclusions. 2) This study was not able to widen its scope of survey from a larger pool of employees due to time, manpower, and financial constrains. This might have an impact on the results and analysis. B. Suggestions and Directions for Follow-up Research The analysis of this research was based primarily on the company in this case study. It is recommended that subsequent research to be carried out on companies of difference portfolios in order to compare results and discussion. This will be a good source of reference for companies and organization considering. 7 REFERENCES [1] Y. F. Wong, L. B. Keng, AHP analysis of the KSF of marine museum outsourcing business model by KSF, engineering science and education journal, vol.5, no.2, pp , [2] Z. Q, Huang, B. Huang, H. Wang, and R. Lin, A study on the critical factors and strategy of Phalaenopsis industry development. Taiwan agricultural association report. vol.9, no.6, pp.50-58, [3] M. Li, G. M. Liu, S. Ding, Y. Lin. A study of KSF of China's biotechnology industry, Soochow Journal of economic and business studies, vol.56 no.2, pp.27-51, [4] H. N. 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