Act Globally, Manage Locally
A version of this article first appeared in eB-21, published 10 times a year in Europe by TBC Research.Based in London and San Francisco, TBC Research helps senior business professionals make more informed technology decisions through its magazine, research, and events portfolio.
To succeed with a global strategy, a business must have a well-planned IT initiative, supported by a solid business case. The recent headline grabbing £42 million ERP replacement and portal project at B2B distributor Hagemeyer is a case in point. Outlined to eB-21 by C10 Peter Hagedoorn, it revolves around the need to cater to clients' global service requirements, with a portal dubbed MR04all.com, and a determination to make the most of its global e-procurement spend and logistics operations.
"This is just following and endorsing our new strategy," said Hegedoorn, chair of the project's global steering committee. But while he looks at the big picture, the serious business of piloting the software is kicking off in the UK where the Birmingham-based division is currently testing and configuring the system.
The operating companies were all involved in selecting a supplier and settled on Intentia of Sweden for ERP, CRM and supply chain management together with its new portal offering. "Sweden is ahead of the US not in inventing new IT but in using it," said Hagedoorn.
The steering committee has five centres of competence--customer relations, supplier relations and procurement, logistics, finance and IT infrastructure--each of which is responsible for setting requirements. Gap analysis, already conducted in the UK, will keep local changes to a minimum. If the UK pilot is a success, the system will be extended across Europe next year.
The thrust of the project is to help transform the loosely tied, ill-focused conglomerate of two years ago into an organization able to serve global customers that no longer want the hassle of dealing with many local suppliers. While Hagemeyer faces competition from e-markets, global customers dealing with its exchange will get the benefit of their own contracts and discounts.
"What we can say to customers is we're not only able to take over your supply in one country, but we can do it in different countries and you'll just get one invoice. You can have one agreement on a global level, and a central distribution contract so you get the same level of service all over the world." Of course, none of this can happen unless its operating companies are closely connected--and here its history does not help.
"There's no reason to be a conglomerate if you do not endorse what divisions are doing from one to another. In the future, our local companies will concentrate on their markets and become operational, while the basic processes will be coordinated via headquarters."
The vision has already seen the company ring-fence its IT professional services and sell off its B2C interests to focus attention on its 8 billion euro professional products and services division: a B2B distributor of electronics, technical, safety and MRO products. The project's first step is ERP replacement. Having grown through acquisition, operating companies have a variety of systems. Often replacement is the easiest option.
Alongside the replacement, an e-procurement initiative under a new procurement officer will see it negotiate global supply contracts. "We are now able to compete all over the world. Where we are buying huge volumes we can get better discounts from suppliers."
The third strand of the initiative will be to combine logistics, ultimately creating consolidated centres. Meanwhile, MRO4all.com has been piloted with three customers over the past six months and is due to go live soon. While the backbone systems replacement is continuing, it will back up existing ways of working, such as EDl, and connect to legacy systems. Robert Claren, head of Intentia's portal activity, explained the benefits of having a global system: "It's about deciding which processes are global and only interfacing with the underlying systems when you need to, because they are not built for interaction."
Globally, Hagemeyer has 9,000 suppliers, 2 million catalogue products and 150,000 customers. "In the future, this will all become one global interconnected system," said Hagedoorn.