Brose Group case study
The Brose Group supplies windows, doors, seat structures, lifegates, and related products for more than 80 auto brands. Major customers include General Motors, Ford, DaimlerChrysler, BMW, Porsche, Volkswagen, Toyota, and Honda. Founded as an auto and aircraft parts manufacturer in Berlin in 1908, the company (as of 2013) has facilities in 58 locations (in 23 countries) and a world-wide workforce of about 22,000 employees (including about 2,500 engineers and technicians). Revenues for 2011 exceeded 4 billion euros ($5.1b, USD in 2011).
In the 1990s Brose experienced rapid growth – some of it coming from the acquisition of existing companies and some of it coming from the organic expansion of Brose’s own facilities. As it grew Brose inherited or acquired a wide range of functional software applications – including accounting, human resources, manufacturing, and supply chain management applications. Some of these applications were built in house and others purchased off-the-shelf. In addition, a variety of operating systems, database management systems and IT hardware were deployed throughout the company to enable the diverse set of software applications that supported different business lines. But as their business grew and became both more complex and required more coordination, Brose management found that existing information systems were unable to address the company’s emerging information processing needs. Too many different information systems meant a lack of standardization and hampered communication among suppliers, plants, and customers. Brose decided to standardize operations on R/3, an ERP solution licensed by SAP that supports more than a thousand different business processes.
The SAP suite of enterprise software applications aligned nicely with Brose business processes – although in a number of instances Brose reengineered and standardized established business processes to make better use of SAP ERP capabilities. The SAP package afforded better oversight and assessment of Brose business processes through real-time report and process value chain integration. The software suite also allowed Brose to accumulate comprehensive and accurate data about key processes and business performance that was subsequently employed to learn about organizational weaknesses and best practices – leading to process improvements and better business forecasting and long-term planning. Overtime, the investment also lowered the total cost of information management and information technology investment by simplifying overall IT architecture at Brose.
Brose’s conversion of its core information management systems to the SAP ERP system contributed to dramatic improvements in enterprise-wide productivity. In 1994, Brose achieved sales of 541 million euros with 2,900 employees, or 186,000 euros per employee. Ten years later, in 2004, Brose attained sales of 2 billion euros with 8,200 employees, or 240,000 euros per employee. And in 2011, despite a world-wide economic downturn and the nearly doubling of its size, the Brose Group exceeded these impressive numbers.
In terms of the formidable challenge in implanting SAP across Brose, the firm followed well-established IT management best practices. First, they hired SAP Consulting to lead the project. The SAP team provided process consulting and implementation support, and it trained end users. According to Christof Lutz, SAP project manager, “Our consultants and the Brose experts worked openly, flexibly, and constructively together. In this atmosphere of trust, we created an implementation module that the customer can use as a basis for the long term.”
The Brose/SAP consulting team decided on a pilot approach. The first installation was conducted at a new plant in Curitiba, Brazil. The team constructed the implementation to be used as a prototype for installations at additional plants. Developing the first implementation was no small feat, because it involved information systems for sales and distribution, materials management, production planning, quality management, and financial accounting and control. Once the initial system was operational at the Curitiba plant, the prototype was rolled out to additional facilities. The second implementation, in Puebla, Mexico, required just 6 months for first operational capability, and the next implementation in Meerane, Germany, was operational in just 19 weeks.
Looking forward, Brose is concerned about standardizing and simplifying its IT architecture as it expands operations globally. Information systems in North America and Asia will need to be integrated as both product design and manufacturing operations expand to these regions. At the same time the corporate initiatives like Brose Working World (BWW) needed to be enabled and supported. BWW represented a new way of deploying IT assets to support a mobile and team-oriented workforce globally. The core elements of BWW (introduced by the company in 2001) include desk-sharing, state-of-the-art IT tools for collaborating, and flexible work scheduling. For example, 12 employees were assigned a workspace with only 10 desks available. As a result, mobile IT computing assets needed to be securely connected to corporate networks, have access to corporate databases, and have a robust set of software applications for use by engineers and executives alike.
Sources: brose.de/en/pub/company (accessed November 2004); http://www.firmenverzeichnis (accessed March 2010); and http://www.brose.com/ww/en/pub/company.htm (accessed Feb 2014).
[see Case Questions immediately below]
[Think about the appropriate representation for your answer. If you need guidance in this area then leave enough time before the deadline to ask me about properly representing your answer.]
1. Assume the strategic focus of Brose is product leadership. Describe three information problems Brose would likely face (i.e., one for each level of information processing).
2. Describe the IT architecture at Brose prior to the SAP implementation. Incorporate IT hardware, software, and data elements (i.e., you can ignore networking components).
3. What would be the likely benefits and risks experienced when moving to a more centralized IT architecture through implementing the SAP ERP suite solution?
4. Explain how the various benefits of taking a business process management approach to improving organizational agility can provide benefits at the tactical and strategic levels of information processing for Brose.