nokia telecommunications 2 rapid responsiveness product innovation flexibility cornerstone of...
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Nokia Telecommunications:Redesign of International Logistics
-------------------------------Avimanyu Datta
Washington State University
Synopsis
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Rapid Responsivenes
s
Product Innovation
Flexibility
Cornerstone of NTC’s Extraordinary Growth
• Head Quarter: Epso, Finland• Supplies Telecom infrastructure
and systems over 40 countries.
• Large Niche telecom equipment player .
• Complex and deregulated marketplace.
• Market Pressure NTC to put uniform customer interface
Synopsis Market Pressure NTC to put uniform customer interface.
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Product Development
Customer Commitment
A new Organization-Wide Process based operating mode
First Major challenge instituting an account management structure that requires
account manager to serve as an interface customer and all divisions.. NOT JUST ONE PROFUCT LINE
Need for Common support tools
A logistics system would allow managers › Spend more time with customer and tp perform analysis
Main topics of the case study
Global Business Strategy and Role of IT
Global Logistics Management
Pacing and Sequencing of Process and IT Changes
Global reengineering project Management
Critical Success Factors For Global Implementation of IT
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Global business Strategy and the Role of IT
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Global Strategies
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• Simultaneously achieve global efficiencies, local responsiveness and high innovativeness.
• Rapid Deployment of Innovation Worldwide
• Foreign Subsidiaries depend on head quarters for new processes, products and know hows
• Closely Managed Worldwide activities through central control
• Economies from standardized product design, global Scale manufacturing
• Local responsiveness and Differentiation
• Foreign Subsidiaries to Operate autonomously
MultinationalGlobal
TransitionalInternational
NTC is moving toward
Transitional Model: Challenges, and Opportunities Transitional Model is a moving target and is
unreachable by most firms.
Until 1997 Information Systems were tailored to Strategic Business Units resulting in localized configurations.
Local conjurations are major barriers to implementing a global strategy.
The only global IT application that was truly global was e-mail system
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Transitional Model: Challenges, and Opportunities NTC had basic hardware infrastructure in place
(WAN, LAN, hardware, OS, office Automation tools)
Connected 4 plants and 40 sales and service
centers throughout the World.
The newly adopted business process approach is seen as a driver for integrated systems
Each country will share the same or similar suit of common systems for core processes
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Global Logistics management
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Global Logistics Management: Need
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Global Logistics Management
Operational Efficiencies
Reduce Lead Times
Decrease Inventory Levels
Improve Quality of Deliveries and
After Sales Services
•Customers want Uniformity and Consistency in dealing with NTC’s product Lines
•NTC wants top reduce internal costs to ensure enough resources for business growth
Global Logistics Management: Critical Success Factors
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Sales and
Marketing
R&D
Production
Customer
Support
Communications Link
Customer Requirements
Complete Package of NTC Product and Services
Improve NTC’s ability to Translate
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Measure
Control
Feedback
Responding Administrative
Areas
Transactional
Cross-Divisional
Levels
Global Logistics Management: Critical Success Factors
Means to
Information About
Local Offices to gain access to new product information residing anywhere within the
NTC
Production and Delivery times
Pacing and Sequencing of Process and IT Changes
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Simultaneous IT & Process Change?
Arguments for Simultaneous Change OF IT and Process
Arguments for Delayed IT Change
Without the tools, the structural change will not lead to process change
An organization can tolerate only so much change at one time
IT enables reengineered processes, and reengineering success depends on IT systems
Markets & customers don’t change overnight; NTC has time to make changes
NTC might be alienating its key frontline people by giving them new responsibilities without any support
The structural changes will make account managers hungry for support tools
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Arguments for Simultaneous Change of IT and Process
Arguments for Delayed IT Change
Without the IT tools, the structural change will not only increase the coordination costs but also response times to customers.
There would be an opportunity to see how the new concepts work before embedding them in an information system
The lead time of a structural change is much shorter than that of a major new IT system
The sales organization can become streamlined before committing to systems
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Simultaneous IT & Process Change?
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Simultaneous IT & Process Change? NTC Concentrated on Making changes in organizational
structure and providing new technology support while leaving the process changes in the hands and discretion of the local management.
In US business reengineering is top down. In Europe esp. Nordic region employees are consulted for job-elated design.
Changes are made by pull from external environment and customers rather than push from top management.
On the surface the structural changes looked drastic, in reality they were more gradual
Account Managers will report to country and area management rather than product division.
Account managers were also needed to have in depth knowledge about Product offerings.
Global Reengineering Project Management
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Global Reengineering Project Management
High risk: State of the art technologies Unstructured requirements Large project
(McFarlan Risk Framework)
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Management of the Project: +ve Aspects
Systems goals are synchronistic with market needs(responsiveness and operational efficiency)
Fundamental information needs were explored before any code was developed.
NTC thought through its business strategy and processes before embarking on a systems project.
NTC considered the reuse of an existing system(TRS logistics system) and an off-the shelf package for part of the system(it decided against both)
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Global Reengineering Project Management
Management of the Project: +ve Aspects(contd) The system architecture is flexible (standardized
message-based interfaces between modules that are divided into global and local units)
The project champion understands the day-to-day needs of the end users.
NTC followed a phased approach to the implementation
NTC installed a common baseline system with options for local customization and add-ons.
There were executive visits to all the sites to sell the system
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Global Reengineering Project Management
Management of the Project: -ve Aspects The project is overly ambitious
The project manager had little large scale information systems implementation experience.
NTC had no prior organizational experience in implementing global systems; it is unclear whether any staff had any experience of this sort.
There were too many IT people and outside consultants relative to the number of local managers with extensive sales function experience.
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Global Reengineering Project Management
Management of the Project: -ve Aspects(..contd)
There was a lack of internal IT expertise, resulting in system maintenance and upgrade problems.
There was too long a lag time between the start of the project (early 1993) and when the field units witnessed the first release (mid 1995)
There was limited acceptance from employees ranging from reluctance to resistance to giving up locally developed systems or home-grown systems.
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Critical Success Factors For Global Implementation of IT
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Manage the field’s expectations of the benefits; it will take time for the field to adjust to the system and see the tangible value from it.
Choose pilot sites where there is a real potential to see reduced delivery times to customers.
Continue communicating to the field, stressing the system’s benefits (i.e. , personal benefits for account managers.)
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Critical Success Factors for Global implementation of IT
Recommend to the steering committee that incentives be instituted for the systems use
Do an analysis of the “grassroots applications” and understand what is common among them (and make sure the international logistics incorporates them, even if in a later release)
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Critical Success Factors for Global implementation of IT
Key Summary Lessons
The transnational model is an ideal,ever-changing target.
Electronic mail is the only truly transnational system supporting NTC globally; yet a transnational model calls for vertical, horizontal, external and temporal integration.
The global logistics process and systems will improve global operational efficiencies and organizational learning, reduce lead times, and improve quality of deliveries and after-sales customer service.
Cycle time for IT and structural changes differ resulting often in delayed IT implementation
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Key Summary Lessons( contd)
Global reengineering projects require continual “pull” from the field.
Global reengineering projects fail if seen as a “push” from the HQ
Local customization must be managed.
Global reengineering is a fine dance of international diplomacy.
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