How to add value to your company’s diversification efforts
The term ‘global village’ was first used by author Marshall McLuhan in the early 1960s, but it has only been in the last few decades that the world has started to take the form described by McLuhan. With the contracting of the globe (metaphorically, of course) a number of organizations have diversified and expanded, both geographically and in other industries. Such expansion, whether into a new country, or a new industry, is bound to bring up various issues.
On the basis of a sample from the top 200 of the Fortune 500 it takes an average of 10 to 12 years before the ROI of ventures equals that of mature businesses.
When a US based Food processing giant started to expand in an emerging Asian market, it chose to enter through the joint venture route. This meant co-ordinating with the local partner and bringing the local partner’s production processes and capabilities to a world-class level. This proved to be a significant challenge, not just because of cultural differences, but also due to incompatible IT source systems. Among other operational inefficiencies, it led to a lack of procurement control – different parts of the business were buying the same parts from largely the same suppliers at different price points. Periodic acquisitions in the new market added to the data management complexity for the F&B giant.
After dismal bottom-line performance for two consecutive years (expecting that the volume of sales would make up for operational inefficiencies) the company finally decided to implement a material master data management system that standardized and de-duplicated all the MRO parts data. With standardized data across plants and business units, the business started spending less time waiting for data, and more time taking data-backed decisions. The difference was immediately apparent.
A similar scenario is detailed in the latest case study by Verdantis. The client is a pioneer as well as a market leader in the cement and building materials business, a material intensive industry by definition. When it started expanding and diversifying into allied fields such as chemicals and paper, the management realized that a key hindrance to achieving projected success was the quality and reliability of the data (specifically the lack thereof) in different ERP, EAM and MRP source systems. Incomplete, inaccurate and inconsistent material master data meant that in spite of having a robust SAP ERP system in place, the organization was unable to realize the potential benefits of the larger procurement organization such as cost savings through volume purchasing and inventory optimization. The cement giant partnered with Verdantis to achieve Material master data excellence. Learn everything about this project by downloading the complete case study.
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