Coloplast Case Study
Executive Summary
Coloplast, an international company that specializes in developing, manufacturing, and marketing medical devices, implemented an off-shoring strategy in order to stay viable, competitive and keep in focus the dynamic market needs. Implementing this strategy has brought some issues that were unexpected for Coloplast. One of the issues was with the organizational structure. Coloplast’s off shoring involved moving operations to Hungary. They would be operating with Danish and Hungarian production plants, where production processes were not the same. Misunderstandings and miscommunication arose amongst employees and created managerial and operational challenges. Another issue that arose was knowledge management and this became a problem since there was very limited documentation on inconsistencies in equipment operation as well as no proper standardization of systems in place. The solution to these problems is to implement company wide processes that help standardize both Hungarian and Danish plants. Employee motivation and communication is another issue and this is attributable to the resistance to change which many employees face. Coloplast didn’t look at these issues with offshoring as their costs were rising locally and they needed to mitigate that cost. Another solution is Coloplast expanding to China where labour is even cheaper than Hungary.
Issue Identification
One of the issues faced was that of the interdependent relationship between the Danish and the Hungarians. There were operational assumptions and activities. Nobody factored in how significant the language barrier would be. It proved to be a significant enough factor that it warranted unexpected time and money to rectify the problems Coloplast faced.
There was a lack of knowledge transfer from the Danish operators to the Hungarian operators and this resulted in operational inefficiencies. The other issue involved the human resource aspects such as limiting attrition
Coloplast, an international company that specializes in developing, manufacturing, and marketing medical devices, implemented an off-shoring strategy in order to stay viable, competitive and keep in focus the dynamic market needs. Implementing this strategy has brought some issues that were unexpected for Coloplast. One of the issues was with the organizational structure. Coloplast’s off shoring involved moving operations to Hungary. They would be operating with Danish and Hungarian production plants, where production processes were not the same. Misunderstandings and miscommunication arose amongst employees and created managerial and operational challenges. Another issue that arose was knowledge management and this became a problem since there was very limited documentation on inconsistencies in equipment operation as well as no proper standardization of systems in place. The solution to these problems is to implement company wide processes that help standardize both Hungarian and Danish plants. Employee motivation and communication is another issue and this is attributable to the resistance to change which many employees face. Coloplast didn’t look at these issues with offshoring as their costs were rising locally and they needed to mitigate that cost. Another solution is Coloplast expanding to China where labour is even cheaper than Hungary.
Issue Identification
One of the issues faced was that of the interdependent relationship between the Danish and the Hungarians. There were operational assumptions and activities. Nobody factored in how significant the language barrier would be. It proved to be a significant enough factor that it warranted unexpected time and money to rectify the problems Coloplast faced.
There was a lack of knowledge transfer from the Danish operators to the Hungarian operators and this resulted in operational inefficiencies. The other issue involved the human resource aspects such as limiting attrition