Aaron Wright

April 17, 2014

ITEC 560-E01
Professor Pantages
FoxMeyer ERP Program
In the early 1900s, FoxMeyer Drugs was among the top five largest distributors of
pharmaceuticals in the United States. At this time, the companys estimated worth was
about 5 billion dollars. In 1993 FoxMeyer decided to pursue what was expected to be a 35
million dollar, 18 month long, IT project. They purchased an SAP system, a warehouse
automation system and hired Andersen Consulting to integrate and implement the two. The
goal of this project was to process more orders and, subsequently, increase efficiency.
Unfortunately this goal was not achieved and by 1996, the company was bankrupt. Shortly
after its bankruptcy, FoxMeyer was sold to a competitor for $80 million.

There were several reasons cited for causing this project to fail. The first was the
somewhat impossible time line that FoxMeyer assigned to the project. If the company had
placed a more realistic timeframe on the project, maybe there would have been a chance for
it to succeed. Next, the warehouse employees whose jobs were directly by the automated
system being implemented were against the project from the very beginning. It is reported
that the first warehouse to switch over to the automated system was sabotaged by
employees, damaging inventory and purposely disregarding orders. The aggressive, blatant,
approach that FoxMeyer take did not sit well with the employees. If they hadnt upset the
employees, there is a strong possibility that the sabotage wouldve never occurred. Lastly,
the new system turned out to be less productive than the one in place before it. By 1994, the

Aaron Wright
April 17, 2014
ITEC 560-E01
Professor Pantages
SAP system was processing only 10,000 orders per night, opposed to the 420,000 orders
under the old system.

Though no company plans to fail, if FoxMeyer had ensured that their company could
survive if the SAP system happened to fail, then maybe they wouldnt have went in a
downward spiral. A better project management team should have taken over the
project as well, one that would have better planned out the project.