It’s intriguing to look at the factors that propel some companies to enter new segments and markets quickly and successfully, while others struggle just to stay competitive in one. In nearly every case I’ve seen, it all comes down to the mindset of how ERP systems are designed and the data they produce are used. If it’s hoarded, used as political capital, kept tucked away in silos, companies fail. On the other hand, when information is freely shared and there is clarity about what the goals of the subsidiary are and how the ERP system accelerates them, great things can be accomplished fast.
Visiting manufacturing centers run by HP, IBM, Schindler, Siemens, Toshiba, United Technologies and many others globally drives this point home. The manufacturing operations that were supported by IT architectures designed to anticipate and respond to market needs flourished. The ones that focused only on pricing or pursuing a commodity strategy eventually failed – or quickly lost their focus and purpose – which led to quality problems and eventual closure. Here are several take-aways from those visits to manufacturing centers globally, many of them in the high-tech and aerospace and defense (A&D) industries:
By relying on a two-tier ERP strategy, one globally-known elevator company was able to displace the long-standing rival in India by cultivating a local supply chain. The competitor, who was U.S.-based, was completing subassembly work in the Midwest and shipping components to India for final assembly at customer sites. By using a two-tier ERP strategy and sharing a common system of record through Master Data Management (MDM) with its European headquarters, this elevator company was successful in displacing 34% of low-end elevators throughout Southern India.
HP’s reliance on a two-tier ERP strategy in its printer production operations led to innovations in process management and new product development. What was remarkable about visiting the HP manufacturing plant in Malaysia was how quickly the entire facility could translate little advances in production processes into cost and time savings. The HP Malaysia plant is well-known for this ability to innovate and educate other manufacturing centers of these advances. Its ability to innovate would not have been possible without HP having chosen a two-tier ERP strategy for its Malaysian operations.
Toshiba’s production centers throughout central Japan were able to quickly shift from printer to laptop production thanks to their two-tier ERP system strategy. Japanese manufacturing is known for removing variation from each production process and striving for Six Sigma levels of production quality. You can feel the passion for quality and the intensity that these companies have for driving every potential aberration to quality out of their supply chain, production and fulfillment processes. Two-tier ERP systems gave Toshiba the ability to react quickly with its laptop, memory and electronics market requirements without having to re-invent its enterprise systems as a result.
Siemens’ use of a two-tier ERP system strategy allowed it to compete in channel assembly programs faster than many distributors. One of the more impressive uses of a two-tier ERP strategy was how quickly Siemens moved to capture market share in channel assembly programs with Ingram Micro and Tech Data. Having a high-margin server platform that could be quickly tailored to larger resellers’ requirements – all orchestrated by a two-tier ERP strategy – gave Siemens a time-to-market advantage over formidable competitors HP and IBM in rack-mounted custom configurations.
Throughout this series of blog posts, examples of how enterprises globally are using two-tier ERP system strategies to gain time-to-market advantages, replace legacy systems, and support business models will be explored.
Bottom line: Two-tier ERP systems will continue to gain in importance as a means to address new market requirements, replace aging legacy systems losing their effectiveness, and support new business models.
Visit part two of this series here: http://erp.cincom.com/2012/01/part-ii-new-market-expansion-with-two-tier-erp/