Abstract of Presentation delivered to China-Europe International Business School

eBusiness Forum: September 24, 2001

eBusiness & Information Technology:

Strategic Levers for Change

by Dr. Irv Beiman
Chairman
e-Gate InfoTech Shanghai, Ltd.

Information technology and eBusiness have the potential to help companies improve their business results. To achieve the full benefit of new strategies and technologies, analysis should be placed within a strategic framework, and initiatives should be executed with careful attention to multiple factors in Change Management.

Without a "burning platform" or, at least, the need and communication of significant pressure for change, such initiatives are likely to fail. Even with such antecedent conditions, there are significant barriers to meeting company expectations and needs for successful execution. These barriers can best be overcome by careful strategic analysis and attention to detailed planning and execution of change management.

Simple definitions are offered for strategic leadership, change management, eBusiness and eCommerce. Key elements for strategic analysis and execution are defined to include external elements [government, regulation, WTO, partners, customers and competitors] and internal elements [strategic goals, business processes, information/tasks/transactions, technology, people and results]. Four organizational trends include: making service consistent and reliable, streamlining supply chain, increasing process transparency and visibility, and using information technology to automate business processes.

Strategic goal setting should include analysis of competitive position and value proposition, with a refining of the value proposition in light of opportunities that are enabled by new technologies. Analysis of a company's ability to meet customer needs better than the competition includes consideration of at least five variables: product, price, quality, delivery and information [detail, clarity, response to changes, transaction cycle time, etc.]. A simple model is described for embedding eBusiness and information technology within a strategic context that is a continuous loop: strategy -> systems, processes and procedures -> eBusiness solutions and information technology -> people + tasks -> business results -> analysis -> strategy.

Five key elements for planning, analysis and execution of change are identified and discussed: content for change; information systems and flow; structure and tools for change; catalysts for change and actions. These elements are incorporated into summary Principles of Change Management.

eProcurement and eDistribution solutions for supply chain management in China are analyzed with suggestions for improving implementation success.

¡¡

eProcurement and eDistribution Solutions

for Supply Chain Management in China

A primary objective of Supply Chain Management [SCM] is to increase the amount and speed of information flow within the extended value chain. This value chain includes suppliers, distributors, customers and end users as well as the OEM or production company that is the focal point for interest.

Risk Management

Supply side's production goal is to satisfy the demand from end users, customers and distributors. End user purchasing in China tends to create uncertain requirements for production and inventory, because of the limited visibility of demand. This uncertainty and lack of information creates multiple risks for production companies.

Increasing production and inventory to meet an expected increase in demand involves risk of excess inventory, negative cash flow and worsening business results. Decreasing production and inventory to meet an expected decrease in demand involves risk of lost sales, reduced revenue and weakening of competitive position. A key management challenge, therefore, is how to balance production and inventory with demand. Competitors face the same problems amidst challenge, risk and uncertainty ¨C trying to understand markets, increase sales, lower costs, improve quality and reduce cycle time.

SCM Solutions Help Companies Cope

SCM solutions are designed to help companies cope with these varied challenges by improving information flow in multiple areas. SCM solutions enable information transparency within the value chain by improving business process automation and access to organized information. SCM solutions connect back office internal information systems [ERP/MRP] with expanded SCM functionality that can be extended to both suppliers and distributors/customers through the internet [or through extranets and intranets]. SCM business process automation impacts major areas of functionality on both the buy-side and sell-side, including the traditional departmental areas of: marketing, sales, planning, procurement, inventory, delivery and financial.

Procurement Challenges in China

China procurement challenges are varied and extensive, including: ¡°favors¡± and relationship affecting supplier selection and negotiation; limited information about suppliers, inefficient negotiation process; weak cost control; variable purchasing cycle time; problems with supplier quality & delivery; and purchasing personnel more focused on details than higher value activities. SCM eProcurement solutions enable improved information flow in multiple areas, thereby reducing costs, improving efficiency and business results.

Distribution Challenges in China

China distribution challenges are also extensive, including: mandatory local distributors for JVs and WFOEs, weak distributor sales performance and motivation; little distributor transparency of desired information; inefficient negotiation and order processes; limited transparency of order and delivery status; and long delivery cycle times. SCM eDistribution solutions enable similar improved information flow in multiple areas, thereby reducing cycle times, improving sales and business results.

SCM Implementation Issues in China

SCM implementation challenges in China can be grouped into three major categories: people; business processes, and IT systems & capability. SCM solutions for China should specifically and competently address all 3 areas for an integrated solution. Implementation can include activities and processes to impact multiple arenas:

• People
• strategy development processes for modernizing and aligning business strategy
• change management processes to improve motivation, stimulate attitude change and involve people in the movement from A to B
• HR processes for reviewing and revising performance management and compensation systems
• reward systems to motivate business partners to move into alignment with the target companiess' eBusiness initiatives
• user training & development
• Business Process
• process mapping & analysis for business process improvement
• business process re-engineering
• Technology
• designed/adapted for China
• robust user-friendly solutions
• capability for flexible connectivity to multiple platforms

The wise approach is to implement technology solutions in phases, accomplishing success at each phase, and incorporating lessons learned as you go. China's specific challenges to successful SCM implementation mean that successful solutions require more than technology.