IT at COSCO (#9-305-080) 1. What do you think of COSCO’s past IT/ERP strategy and IT (and/or SC) capabilities? Until the 1990s COSCO did not establish any global IT / ERP strategy. With the investment in an IBM AS/400 mainframe computer in 1988 COSCO made the attempt to form a common and user-friendly IT platform. Nevertheless until 1993 every company of the COSCO group operated their own software in the following four business fields (1) scheduling, (2) finance, (3) container management and (4) business statistics.
Due to the fact that each company developed their software independently with own patches and interfaces no compatibility was given. The company’s structure and organization was not build to communicate a complex and global IT strategy. The focus of the top management team was not on IT so far. They haven’t recognized that right standardization of IT structure could increase the business performance. During the mid-1990s COSCO started to think global regarding the structure of their IT system.
In 1994 they bought Tradeware but the internal development failed. In 1996 the first central electronic data interchange center was set up to coordinate communication within the global company. In the late-1990s COSCO tried to stabilize their IT network with hiring more and more IT experts. The number of IT staff increased from 45 in the late-1990s to 349 employees in 2001. On the one hand COSCO benefited by the increased IT consideration but on the other hand COSCO still relied on the old IT-platform which was not up-to-date.
Around the turn of the century COSCO started to recognize that a unified and globally spread IT network could uphold or even increase the competitiveness. COSCO made investments in SAP Financial Management System and IRIS-2 Container Management System. In conclusion it is to say that the development of COSCO’s IT strategy was conventional for the business community. After realizing that isolated IT applications have a negative input on the business performance, they started to think globally regarding their own IT network.
They also recognized that they cannot do everything on their own. With the decision to buy SAP they also hired IBM Global Services to help implement SAP. Even in bad times of business they realized, without a huge investment in their IT structure a positive company result could not have been accomplished. 2. Discuss the relative importance of ERP and SCM in the current case setting. Focus your discussion on how ERP and SCM can support COSCO’s Operations Systems (e. g. Forecasting, Inventory Mgt. ) and therefore enhance its competitive position.
SCM and ERP provide the necessary basis to enhance COSCO’s competitive position. SCM and ERP make an hurry ahead, an accompanying and return flow of the whole information flow possible. Regarding the three major SCM and ERP investments such as SAP, IRIS-2 and the Global Navigation Intelligence System COSCO did make a huge step in increasing the competitive position. SAP – The SAP Financial Management System established a unified reporting system throughout the COSCO Group. The management teams get a better overview of the financial position of each single business unit by using the SAP system.
The system enabled the possibility to identify positive and negative trends in each business unit readily without the need of a huge amount of time and employees. IRIS-2 – This container management system reduced paper work, hours of work and enabled identification and booking of the most cost-effective routes online. Furthermore it increases the amount of data, which was accessible via the intranet. Consequently order related information was accessible within the whole group through the intranet.
Moreover IRIS-2 allowed COSCO to plot the most cost-effective means of returning empty containers. Every single advantage of this system ends in more customer satisfaction and at the same time reduces costs. Global Navigation Intelligence System – This satellite-based ship-position monitoring system enhanced the safety of ships and allowed the accurate tracking of individual containers. Furthermore tracking and tracing was offered to the customers which ends in higher customer satisfaction and higher profit.
In conclusion all three systems increased the information flow, decreased the paper work, saved costs and boost the service portfolio, which can be offered to the own clients. Without the installation of SCM and ERP COSCO would not have been able to keep up with their competitors. 3. What other strategic recommendations would you make to COSCO top management teams? The article points out that in the phase of implementation of the new systems, the employees felt anxious about their possible loss of knowledge.
In our opinion we recommend that COSCO’s top management always have to involve not only IT experts and management staff when it comes to implement new software but also involve the employees who work with the software on a daily basis. At the end the employees have to work with this system on a daily basis and not the IT experts. Despite this we recommend a change in the company’s structure. COSCO needs to establish a company structure, which also includes a manager for IT and SCM. COSCO realized in the last years that SCM and IT belong each other.
In this respect the company’s structure needs to point out the importance of SCM and IT. In doing so every single employee would understand the importance of SCM and IT in COSCO’s business and the organization of projects such as the installation of a new IT system would be controlled by one business field. This could assure that independently developed patches and interfaces and the ensuing incompatibility are avoided. Furthermore we recommend to install a customer web-based interface with a secured access via the internet to enable access to customer related order data and tracking and tracing information as well as bills etc.