Questions:
2.) What type of global business and systems strategy did Nestle adopt?
Nestle adopted a transnational strategy which involved managing nearly all of its value-adding activities from a global perspective without reference to national borders, optimization of sources of supply and demand wherever they appear, and taking advantage of any local competitive advanatages. The globe not the home country is the management frame of reference. Nestle wanted to be the first global enterprise to conduct business as if it were operating in a single country. This meant that it had to choose one system and make all countries conform to that system no matter what local differences there might be and know matter what differences there were in the way they conducted day to day business.
3.) What management, organization, and technology challenges did Nestle have to deal with to standardize its business processes and systems?
Management challenges included convincing all of the market heads around the world to adopt one single set of business processes and systems for procurement, distribution , and sales management. All of the managers felt that their way of doing business was the right way and it was a challenge to get them all on board to give the new system a chance. As a whole organization it was challenging because up to that point each local organization had been allowed to run the business as it saw fit which took into account local conditions and cultures. Standardization of all of the company's systems completely changed the culture of the company. No longer was each global site its own autonomous unit, now everyone was expected to use the same system and do things the same way no matter what part of the world they resided in. The technological challenges that the company faced wsa that Nestle facilities in 14 countries all ran their ERP software differently and used different schemes for formating data and management forms. Also many of the company's core processes were not documented and were passed down by word of mouth. All of these processes needed to be documented so that the best way to run the business could be determined and all sites could use these core processes.
Showing posts with label chapter15. Show all posts
Showing posts with label chapter15. Show all posts
Sunday, June 8, 2008
Article Summary
GET A GRIP
Mary Hayes Weier
InformationWeek; Nov 5, 2007; 1161; ABI/INFORM Global
pg. 41
This article discusses offshore outsourcing and how that it is creating new risks and requiring new strategies to deal with those risks. The article opens with a description on how the CIO from Genworth Financial, a company that provides mortgage and life insurance has had to change his whole routine because of IT outsourcing. He now has to come into work extra early (between 6:00-6:30 A.M.) so that he can spend the first couple of hours of the day dealing with IT teams in India and Europe before the U.S. workday starts. In 10 years Gensworth went from outsourcing just a few IT projects to almost having half of all IT work done outside the U.S. This firm and other firms like it in the U.S. prefer to use the term "globalization" instead.
The article goes on to explain how the techniques for dealing with offshore IT employees and projects is now changing to deal with some of the challenges that come with the territory. For instance, firms that employee outsourcing of their IT functions are trying to have a closer relationship with the vendors that they are employing. This includes doing things like helping improve with employee retention and attempting to treat those problems more like their own inhouse problems. Companies are also trying to hold the providers more accountable for costs and outcomes and also are giving them more critical work. It appears that since more companies are relying on outsourcing as a way to cut costs there is also more of a need to make sure that the investment is really paying off and that means having more involvement in what is going on.
The article also mentions that even though cost cutting is still the main reason for outsourcing, some companies are also depending more on foreign markets for revenue growth. To become successful in those markets these companies are starting to put employees in those markets including IT. Companies are also looking for the latest skills and technology platforms which many see as coming out of India. The hardest lession that has been learned with all the outsourcing in the last decade was the hidden costs associated with it. To avoid these hidden cost companies are now creating outsourcing contracts based less on input andm ore on output (that is generating revenue from new products, meeting systems uptime requirements, ect).
The article ends by discussing the ongoing problem of retaining skilled outsourced employees. Many employees would get burned out at having to work night shifts just to please U.S. customers. Outsourcing companies are trying to change this and make the work environment better to help retain these employees.
This article relates back to what was discussed in the chapter on the challenges of implementing global information systems. It is important to make sure that the benefits outweigh the costs and that companies monitor these types of systems to make sure everything runs smoothly. It can be much harder to fix a problem that is occuring on the other side of the world once it has already happed but close monitoring and adjustments can keep a new global system running smoothly and make it remain profitable. I also have experience with outsourcing at my own company. Recently we began to outsource the production of some of the recombinant proteins that we make to India. This has helped to cut costs for the company but early on there were some challenges. For awhile production levels were much lower than normal as the new team got used to the proccesses. I think one important thing that helped improve the process was that some of the scientists from the India group came to our site for training and to meet everyone. It helped both the India site and our site transition faster to the new arrangement and since then production has been high with few problems.
Mary Hayes Weier
InformationWeek; Nov 5, 2007; 1161; ABI/INFORM Global
pg. 41
This article discusses offshore outsourcing and how that it is creating new risks and requiring new strategies to deal with those risks. The article opens with a description on how the CIO from Genworth Financial, a company that provides mortgage and life insurance has had to change his whole routine because of IT outsourcing. He now has to come into work extra early (between 6:00-6:30 A.M.) so that he can spend the first couple of hours of the day dealing with IT teams in India and Europe before the U.S. workday starts. In 10 years Gensworth went from outsourcing just a few IT projects to almost having half of all IT work done outside the U.S. This firm and other firms like it in the U.S. prefer to use the term "globalization" instead.
The article goes on to explain how the techniques for dealing with offshore IT employees and projects is now changing to deal with some of the challenges that come with the territory. For instance, firms that employee outsourcing of their IT functions are trying to have a closer relationship with the vendors that they are employing. This includes doing things like helping improve with employee retention and attempting to treat those problems more like their own inhouse problems. Companies are also trying to hold the providers more accountable for costs and outcomes and also are giving them more critical work. It appears that since more companies are relying on outsourcing as a way to cut costs there is also more of a need to make sure that the investment is really paying off and that means having more involvement in what is going on.
The article also mentions that even though cost cutting is still the main reason for outsourcing, some companies are also depending more on foreign markets for revenue growth. To become successful in those markets these companies are starting to put employees in those markets including IT. Companies are also looking for the latest skills and technology platforms which many see as coming out of India. The hardest lession that has been learned with all the outsourcing in the last decade was the hidden costs associated with it. To avoid these hidden cost companies are now creating outsourcing contracts based less on input andm ore on output (that is generating revenue from new products, meeting systems uptime requirements, ect).
The article ends by discussing the ongoing problem of retaining skilled outsourced employees. Many employees would get burned out at having to work night shifts just to please U.S. customers. Outsourcing companies are trying to change this and make the work environment better to help retain these employees.
This article relates back to what was discussed in the chapter on the challenges of implementing global information systems. It is important to make sure that the benefits outweigh the costs and that companies monitor these types of systems to make sure everything runs smoothly. It can be much harder to fix a problem that is occuring on the other side of the world once it has already happed but close monitoring and adjustments can keep a new global system running smoothly and make it remain profitable. I also have experience with outsourcing at my own company. Recently we began to outsource the production of some of the recombinant proteins that we make to India. This has helped to cut costs for the company but early on there were some challenges. For awhile production levels were much lower than normal as the new team got used to the proccesses. I think one important thing that helped improve the process was that some of the scientists from the India group came to our site for training and to meet everyone. It helped both the India site and our site transition faster to the new arrangement and since then production has been high with few problems.
Subscribe to:
Posts (Atom)