Inherent in the increasingly global nature of business is an ever expanding rolodex of contacts, connections, and relationships – the nature of which are growing in complexity. A Maytag refrigerator has a multitude of components in its Bill of Materials which were manufactured all over the world by various suppliers and will be sold all over the world by individual, decentralized profit centers. The orchestration and coordination of these complexly linked working relationships can become very complicated, particularly for a multinational enterprise like Maytag. Understanding, coordination, and controlling these linkages may not always be easy, but the management of these complexities is vital, as any one weak link can prove catastrophic for the Maytag brand. As such, the centralization of information within an organization becomes essential for managing multiple profit centers with any sense of consistency across business units. For this reason, implementing an ERP system makes complete sense as a tool for managing these complexities, but with every solution comes additional challenges, especially with a management tool that requires universal acceptance across the individual units within its enterprise.
Obtaining universal buy-in for a system which requires centralization of information across profit centers that have decentralized control can be tricky to say the least, especially since consensus and support from all profit centers is paramount to the successful implementation of the system itself. The resistance with which many profit centers meet a forced application of ERP is understandable. Because each unit is responsible for their own profitability and cost control, they may be reasonably apprehensive about a system which demands a certain degree of universal standardization. As these profit centers are now expected to comply with the prescribed information repository and data system, they must be given a voice in how that system is structured and to what degree each unit must implement ERP into their day-to-day activities.
Asking each profit center to comply with the ERP system is a valid request, as such a system can create synchronization, simplification, and standardization that is invaluable to the successful operation of a multinational enterprise. However, from a “taxation without representation” perspective, the costs of implementation must also be considered carefully. The use of an ERP system typically requires profit centers to make some degree of changes to their existing business processes – a caveat which makes ERP acceptance considerably more challenging in decentralized organizations. Also, because each profit center is essentially competing against the others, there is an understandable level of resistance to sharing sensitive information between departments, and the ERP system can fail without strong commitment from all business units within the Maytag brand.
To foster the necessary support, key decision makers within each profit center should be educated about what implementation of ERP means for the Maytag brand. This information exchange should focus on the overwhelming benefits of the system for the brand as a whole, as well as how those benefits can trickle down to the individual profit centers, helping them to become more efficient, profitable, and competitive. This communication from Maytag executives to leadership within each profit center should be frequent and interactive rather than a one-time presentation. Profit centers should be able to voice concerns and provide suggestions prior to and throughout implementation of the ERP system, and they should also be given a say in the timing and execution of any system updates. This will help to build not only understanding and compliance, but also excitement and commitment, both to the Maytag brand, and to the successful use of ERP.
As this ongoing dialogue regarding the ERP system’s use and performance can get time-consuming, it may be beneficial to create a dedicated implementation team with a project leader responsible for the successful integration of ERP across the organization. These employees can perhaps come from multiple profit centers within the division, but their typical workload may need to be lightened to give them enough time to dedicate to this new ERP task force. Prior to implementation, the dedicated ERP team can tackle issues regarding which functions of the system will be automated, which modules will be adopted by all users, and what degree of system customization will be needed. Compromises will likely need to be made between Maytag executives and individual profit centers to ensure the system operates in a way that is equally beneficial for the enterprise as a whole and the profit centers as individuals. Maytag should also consider hiring an ERP expert consultant to work alongside its dedicated ERP team in the initial stages of system deployment.
Another key ingredient for success is realistic timing and expectations for the system’s implementation. The successful implementation of any information system, particularly one which must bridge the many complex linkages of a multinational enterprise, takes time, careful planning, and a great deal of resources. The industry average for implementing an on-premise ERP system is 1.5 years. Although this can be shortened to nearly 3 months for cloud-based ERP, there still needs to be sufficient time and resources dedicated to ERP execution and day-to-day operation in order to ensure its success.
Should Maytag follow the best practices described above while carefully considering the costs and benefits of ERP implementation along each step of the process, they will soon see the benefits of a centralized information system which takes care to incorporate the needs of its decentralized business units.