Erp Localization in a Foreign Subsidiary of the K Company
ERP Localization in a Foreign Subsidiary of the K Company
Ji-Ye Mao
Wei Wang
Mianzhen Pan
Foreign subsidiaries of multinational companies (MNCs) are often mandated to adopt the same ERP package used by their parent, but the results vary to large degrees. ERP implementation in foreign subsidiaries involves bigger challenges than at home. It is partly because of potential misfits between the software package, which reflects European and U.S. industry practices, and the local cultural, economic, and regulatory context. For this reason, the misfits may be worse in Asia than in western countries. After all, ERP is not only a software package but also a way of doing business.
K Company (a fictitious name) is a large U.S.-based manufacturing business and world leader in its product lines. Since its entry into the Chinese market in 1995, it had set up 10 plants and over 500 sales outlets in China by 2008, and placed its Asia-Pacific regional headquarters in
Shanghai. To synchronize its subsidiaries in China and around the world, the parent company needed to develop a uniform information technology platform. It was considered crucial for closely monitoring the operations of the subsidiaries dispersed worldwide in real time. Based on the SAP implementation in North America and its global headquarters, a plant in Australia and another one in New Zealand also successfully adopted the same ERP.
The Shanghai plant, referred to as KS hereafter, was specialized in making bathtubs. It had over 600 employees including dozens of office workers and managers. KS was chosen to be the first unit in China to implement SAP (five modules in fact) in February 2006, along with the regional headquarters. The stake was high as the success of this project would affect the company’s manufacturing operations in China, and also with impact on the parent company’s global strategy.
The existing IS applications at KS were fragmented. For example, procurement and
Ji-Ye Mao
Wei Wang
Mianzhen Pan
Foreign subsidiaries of multinational companies (MNCs) are often mandated to adopt the same ERP package used by their parent, but the results vary to large degrees. ERP implementation in foreign subsidiaries involves bigger challenges than at home. It is partly because of potential misfits between the software package, which reflects European and U.S. industry practices, and the local cultural, economic, and regulatory context. For this reason, the misfits may be worse in Asia than in western countries. After all, ERP is not only a software package but also a way of doing business.
K Company (a fictitious name) is a large U.S.-based manufacturing business and world leader in its product lines. Since its entry into the Chinese market in 1995, it had set up 10 plants and over 500 sales outlets in China by 2008, and placed its Asia-Pacific regional headquarters in
Shanghai. To synchronize its subsidiaries in China and around the world, the parent company needed to develop a uniform information technology platform. It was considered crucial for closely monitoring the operations of the subsidiaries dispersed worldwide in real time. Based on the SAP implementation in North America and its global headquarters, a plant in Australia and another one in New Zealand also successfully adopted the same ERP.
The Shanghai plant, referred to as KS hereafter, was specialized in making bathtubs. It had over 600 employees including dozens of office workers and managers. KS was chosen to be the first unit in China to implement SAP (five modules in fact) in February 2006, along with the regional headquarters. The stake was high as the success of this project would affect the company’s manufacturing operations in China, and also with impact on the parent company’s global strategy.
The existing IS applications at KS were fragmented. For example, procurement and