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Getting IT Right
Modern information technology started four decades ago, yet in most major corporations, IT remains an expensive mess. This is partly because the relatively young and rapidly evolving practice of IT continues to be either grossly misunderstood or blindly ignored by top management. In this article, the authors say a systematic approach to understanding and executing IT can and should be implemented, and it should be organized along three interconnected principles: First, Long-Term IT Renewal Plan Linked to Corporate Strategy. Such a plan focuses the entire IT group on the company's overarching goals during a multiyear period, makes appropriate investments directed toward cutting costs in the near term, and generates a detailed blueprint for long-term systems rejuvenation and value creation. Second, Simplified, Unifying Corporate Technology Platform. Instead of relying on vertically oriented data silos that serve individual corporate units (HR, accounting, and so on), companies adopt a clean, horizontally oriented architecture designed to serve the whole organization. Third, Highly Functional, Performance-Oriented IT Organization. Instead of functioning as if it were different from the rest of the firm or as a loose confederation of tribes, the IT department works as a team and operates according to corporate performance standards. -
Colt Companies
Colt Companies provides engineering design, procurement and construction services to the oil and gas industry. The company president knew that, to continue to grow, the company needed to expand its service offerings or its geographic base. He was considering expansion into the United States, which had a lot of prospective benefits, but also some drawbacks; among others, the company perceived the engineering contractor market was mature and highly competitive. The company had several expansion options: build its business slowly on its own; tender an initial public offering and provide existing partners with shares in the new public company, and use the cash to acquire other firms; go forward with an acquisition based on debt rather than equity; or merge with a private competitor. The president was expected to choose a strategy and champion his case to the board of directors. -
Numico (A): Delivering Innovation Through the Supply Chain
Numico, Europe's second-largest infant food manufacturer, decides to refocus its strategy on its core markets after an ill-fated incursion into the U.S. vitamin market that has left it with large losses. An integral part of the strategy is to launch new and innovative products that address previously untapped needs. Follows the challenges facing Numico and its first supplier of finished products during the launch of the first product under the new strategy. A 2004 EFMD award winner. -
Numico (B): Transforming the Supply Chain to Support New Realities
Numico, Europe's second largest infant food manufacturer, refocuses its strategy on its core markets. The key is strategic change -- including new product introduction and production rationalization. To improve customer satisfaction levels and reduce costs, the company initiates two large projects, the first is aimed at visibility to demand and inventory levels--and new supply chain practices to coordinate them, with improved reaction time. The second is complete overhaul of the production and distribution process that includes plant reduction, product rationalization and shifting of production to Eastern Europe. The case looks at the challenges for their implementation, the role of a key change manager, and the future of the company. -
Excel Logistics Services
Looks at the introduction of statistical process control (SPC) into a distribution center servicing a department store chain. Focuses on the receiving process in the distribution center and describes the introduction of SPC methodology. Discusses run charts, pareto diagrams, and control limits. -
Six Sigma Quality at Flyrock Tires
Assumes an understanding of statistical process control and focuses on highlighting the usefulness of Six Sigma quality. Focuses on the issue of a worn bearing at a tire manufacturer leading to a mean shift (while producing defectives). Shows how a Six Sigma process would quickly detect the mean shift while producing fewer defectives. -
Weight Solutions Clinic: Bariatric Surgery Center
Addresses how flow times and capacity calculations can be made for a service process such as the Bariatric Surgery Center at a clinic. Highlights how these calculations can be made for a service process just as in any manufacturing setting. Discusses the notions of critical paths and bottlenecks and what factors affect both time and capacity. Also, discusses the relative profitability of two types of bariatric surgery, the goal being to link product profitability to the process. -
Mary Kay Inc.: Direct Selling and the Challenge of Online Channels
Mary Kay is one of the best-known direct sellers of women's cosmetics in the world. Its channel strategy is to use independent beauty consultants, who are independent distributors, to sell directly to consumers. Its compensation plan is multilevel, providing commissions to distributors on their own sales as well as the sales of the distributors they recruit. At the time of the case, the company is grappling with a well-established change in consumer behavior--the decline of the stay-at-home mom as she returns to the workforce--combined with the opportunities offered by Internet selling. Focuses on the company's efforts to move with consumer demand and behavior, while remaining true to its core goal of "Improving Women's Lives." Discusses ways Internet technology can be used throughout the company's channel and supply chain structure, not just as a route to market. -
Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations
Michaels Craft Stores is the largest arts and crafts retailer in the United States and in the world. Its CEO, Michael Rouleau, wants to expand the chain to 1,000 stores by 2006. The key constraint is the lack of sophistication among Michaels' supplier base, which is made up of over 1,000 suppliers, many of which are small, creative companies with little computer or logistics knowledge. As a result, the cost of running Michaels' supply chain is high. Describes the company's efforts to build the sophistication of its suppliers through educational Vendor Flow Training courses that teach suppliers how to adopt state-of-the-art practices for improved efficiency in supplying their channel. -
Verklar Austria
Verklar is the leading maker of roof windows based in Europe. Its Austrian subsidiary has historically dominated the Austrian market, with about 85% market share. However, at the time of the case, its market share has dropped to about 75%, and many of its dealers have either dropped the line entirely or are buying not from the company, but from the few remaining large dealers who still buy directly from Verklar. This has prompted the president of the subsidiary to devise a new way--called the Quota System--to run the distribution channel in the country to improve performance. Asks the reader to examine the sources of market share decline and whether the proposed Quota System solves the channel's problems. -
Rockwell Automation: The Channel Challenge
Rockwell Automation's Allen-Bradley division was considering how to deal with the threat posed by national distributors in the maintenance, repair, and overhaul (MRO) business for its industrial automation products. National distributors were consolidating the MRO distribution channel, offering national account customers an integrated multichannel solution for their MRO needs. Allen-Bradley had traditionally served its customers through high-touch, high-value-added local distributors, but this channel was inadequate for the demands of large MRO customers. An effort by Allen-Bradley and other manufacturers to create an industry-wide electronic sourcing consortium called SourceAlliance.com had failed. Now the company had to choose between redesigning its traditional channel by creating a virtual network of local distributors, striking an alliance with a national distributor, or withdrawing from the MRO market. It had to contend with difficult channel conflict issues in choosing a channel strategy. -
Velky Potraviny--Prague
Velky Potraviny is a discount grocery store chain in the Czech Republic. The firm strives to be the market leader in providing a wide assortment of grocery products at the lowest possible price. The move toward a market economy has prompted rapid expansion, and the Velky distribution center is nearing capacity for the 37 outlets it presently serves in the greater Prague area. Velky has realized the need for efficiency in its warehouse operations. Velky further recognizes that the distribution center employees are an integral part of the company and critical for efficient warehouse operations, hence the need to address the performance measurement system of the workers. Velky cannot independently address the issue of worker performance measurement without addressing the inter-related issues of the warehouse, namely, the layout of the warehouse, flows within the warehouse, capacity expansion, managing deliveries to the outlets, and its overall link to the corporate goal. -
Dragon's Teeth Vineyards
Dragon's Teeth Vineyards (DTV) is a South African wine producer that is considering whether to use genetically modified organisms (GMOs) in its wine-making process. GMOs promise to lower the costs of wine production significantly through increased yields and reduced processing times as well as significantly improve the quality of the final product via the use of GM yeasts in fermentation. However, the market acceptance of GMOs is unclear, due to perceived health risks and reactions from traditional "old world" producers who believe the beauty of wine lies in its craft, dependence on local soil and climate, and inherent variability. -
Loctite Corp.
Loctite Corp., a large industrial adhesives company, has implemented the five principles of lean management on its customer service operation. A recent merger of the customer engineering service operation with the dispensing equipment operation has the vice-president of technical service and application engineering looking at applying the lean principles on the equipment operations. The company initially considered equipment a secondary product line, needed only to augment its service offering in support of the core product--industrial adhesives. In addition, most of Loctite's equipment manufacturing activities were outsourced, so suppliers played a key role in lean transformation. The vice-president must prepare a plan to implement the principles of lean management while meeting the goals set out by the president of the company. -
They Bought In. Now They Want to Bail Out. (HBR Case Study and Commentary)
Chief Technology Officer Barry Golding is meeting with Mathews & Co.'s department heads to ask for another round of investment so he can begin implementing customer relationship management software at the menswear chain. For months, he has been the CRM project's cheerleader, and it is Barry whose reputation is at stake. He quickly loses control of the meeting. One department head is disappointed that so few of her wish list items are in Barry's latest plan. Another is sour on the project now that he's discovered he won't get any payback for two years. The CEO, who has given the project his blessing, isn't present to back up Barry. Barry can't see what he could have done to keep the department heads on his side. But a friend later tells him about what she calls the "blue sky paradox:" You have to get people to dream big to sell a project, but by doing that you set them up to be disappointed. What can Barry do to save the project? Commenting on this fictional case study in R0312A and R0312Z, are Nathaniel Leonard, the supply chain director of Goodyear's Engineered Products business; Andrew McAfee, an assistant professor at Harvard Business School; Barry J. Gilway, the executive vice-president of Zurich North America Services; and John Freeland, the managing partner of Accenture's CRM practice. -
They Bought In. Now They Want to Bail Out. (HBR Case Study)
Chief Technology Officer Barry Golding is meeting with Mathews & Co.'s department heads to ask for another round of investment so he can begin implementing customer relationship management software at the menswear chain. For months, he has been the CRM project's cheerleader, and it is Barry whose reputation is at stake. He quickly loses control of the meeting. One department head is disappointed that so few of her wish list items are in Barry's latest plan. Another is sour on the project now that he's discovered he won't get any payback for two years. The CEO, who has given the project his blessing, isn't present to back up Barry. Barry can't see what he could have done to keep the department heads on his side. But a friend later tells him about what she calls the "blue sky paradox:" You have to get people to dream big to sell a project, but by doing that you set them up to be disappointed. What can Barry do to save the project? Commenting on this fictional case study in R0312A and R0312Z, are Nathaniel Leonard, the supply chain director of Goodyear's Engineered Products business; Andrew McAfee, an assistant professor at Harvard Business School; Barry J. Gilway, the executive vice-president of Zurich North America Services; and John Freeland, the managing partner of Accenture's CRM practice. -
They Bought In. Now They Want to Bail Out. (Commentary for HBR Case Study)
Chief Technology Officer Barry Golding is meeting with Mathews & Co.'s department heads to ask for another round of investment so he can begin implementing customer relationship management software at the menswear chain. For months, he has been the CRM project's cheerleader, and it is Barry whose reputation is at stake. He quickly loses control of the meeting. One department head is disappointed that so few of her wish list items are in Barry's latest plan. Another is sour on the project now that he's discovered he won't get any payback for two years. The CEO, who has given the project his blessing, isn't present to back up Barry. Barry can't see what he could have done to keep the department heads on his side. But a friend later tells him about what she calls the "blue sky paradox:" You have to get people to dream big to sell a project, but by doing that you set them up to be disappointed. What can Barry do to save the project? Commenting on this fictional case study in R0312A and R0312Z, are Nathaniel Leonard, the supply chain director of Goodyear's Engineered Products business; Andrew McAfee, an assistant professor at Harvard Business School; Barry J. Gilway, the executive vice-president of Zurich North America Services; and John Freeland, the managing partner of Accenture's CRM practice. -
Greenlands General Hospital - Portering
The vice-president of rehabilitation and support at a hospital must decide if the request from a department to automate and track the dispatch of porters within the hospital is the best solution. He is aware that this area has been experiencing problems, however, he is not sure he has enough information to make the decision and instructs the manager of the department to provide a cost-benefit analysis and alternatives. -
Indian Oil Corporation Limited - The Mathura Refinery
In March 2002, the general manager of Mathura Refinery had to respond to new national legislation that mandated the production of new cleaner-burning fuels. While these fuels would reduce vehicular emissions in the country, there was the possibility of increased local emissions from the refinery from the new processes used to produce these fuels. Effluent and oily sludge emissions also demanded management attention. The general manager recognized that Mathura Refinery had unique constraints because of it close proximity to the Taj Mahal. Any future expansion of the refinery's capacity would be contingent on its ability to reduce sulfur dioxide emissions and address public expectations. -
Flextronics International, Ltd.
Describes Flextronics' evolution from providing outsourced manufacturing services for original equipment manufacturers (OEMs) in the electronics industry to developing entire unbranded products for purchase by OEMs. In 2001, Flextronics began a development program that yielded several unbranded cell phones that--even by the admission of several OEMs--delivered performance comparable to that of branded products at a significantly lower cost. Nonetheless, as of early 2003, no major OEM had yet agreed to purchase any of these phones from Flextronics. As chairman and CEO of Flextronics, Michael Marks must decide how aggressively to pursue full product development.