GEARBOX (China) Ltd.: will the company's ERP system support its ambitious growth strategy?
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& 2004 JIT Palgrave Macmillan Ltd. All rights reserved 0268-3962/04 $30.00 palgrave-journals.com/jit
Teaching case
GEARBOX (China) Ltd.: will the company’s ERP system support its ambitious growth strategy? Kai Reimers RWTH Aachen University Correspondence: K Reimers, Research Area of Electronics Business, Faculty of Economics and Business, RWTH Aachen University, Johanniterstr. 22-24, 52064 Aachen, Germany. Tel: þ 49 (0) 241/40923 22; Fax: þ 49 (0) 241/40923 18; E-mail: [email protected]
Abstract This case describes the experience of a wholly foreign-owned manufacturing company in Tianjin/China regarding the use of its ERP system in its main functional departments, purchasing, production planning, sales/distribution, and finance. The company is part of a group which is a global leader in the manufacturing and distribution of mechanical devices, called gearboxes, that are needed to drive a wide range of facilities such as escalators and baggage conveyor belts in airports. It has entered China in 1995 and the Tianjin manufacturing facility has soon become a hub for the Asian market. The main challenge confronting the management team is to support the breakneck growth rate of this young company. The company’s ERP system plays a crucial role in this task. However, it seems that middle managers are frequently hitting an invisible wall when trying to expand the use of the ERP system in order to cope with ever-increasing workloads and coordination tasks. This case serves to illustrate cultural issues implicated in the use of an enterprise wide information system in a medium size company operating in an emerging market economy. In addition, issues of operations management, global management, and organizational behaviour are addressed. Journal of Information Technology (2004) 19, 140–148. doi:10.1057/palgrave.jit.2000010 Published online 13 April 2004 Keywords: ERP systems; cultural issues; information system use; manufacturing; China
Company background EARBOX (China) Ltd. (pseudonym) is part of the globally operating family-owned German-headquartered GEARBOX Group with worldwide sales of DM 1.6 billion and 7000 employees in 2000. Its main business is the manufacturing, distribution, and servicing of gear units (‘gear boxes’) and motors that drive a diverse set of machinery such as retractable roofs in stadiums, baggage conveyor belts in airports, escalators in department stores, and assembly lines. With the industry defined as such, the GEARBOX group maintains a global leadership position. The parent company has been founded in 1931. In 1945, the founder’s son in law took over general management responsibility, expanded the company internationally and, as early as 1965, devised a strategy of modularizing the company’s main products so that the manufacture of components could be centralized in a few selected sites,
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while globally dispersed plants would assemble the finished products according to customer requirements (see Exhibit 1 for a map of GEARBOX’ global reach). From a set of roughly 3000 components, mil
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