Nokia Telecommunications: Redesign of International Logistics

1. Nokia Telecommunications:Redesign of International Logistics ------------------------------- Avimanyu Datta Washington State University

2. Synopsis • Head Quarter: Epso, Finland • Supplies Telecom infrastructure and systems over 40 countries. • Large Niche telecom equipment player . • Complex and deregulated marketplace. • Market Pressure NTC to put uniform customer interface Cornerstone of NTC’s Extraordinary Growth Nokia Telecommunications

3. Synopsis A new Organization-Wide Process based operating mode • Market Pressure NTC to put uniform customer interface. Product Development Customer Commitment • First Major challenge • instituting an account management structure that requires account manager to serve as an interface customer and all divisions.. NOT JUST ONE PROFUCT LINE • Need for Common support tools • A logistics system would allow managers • Spend more time with customer and tp perform analysis Nokia Telecommunications

4. Main topics of the case study • Global Business Strategy and Role of IT • Global Logistics Management • Pacing and Sequencing of Process and IT Changes • Global reengineering project Management • Critical Success Factors For Global Implementation of IT Nokia Telecommunications

5. Global business Strategy and the Role of IT Nokia Telecommunications

6. Global Strategies NTC is moving toward Nokia Telecommunications

7. Transitional Model: Challenges, and Opportunities • Transitional Model is a moving target and is unreachable by most firms. • Until 1997 Information Systems were tailored to Strategic Business Units resulting in localized configurations. • Local conjurations are major barriers to implementing a global strategy. • The only global IT application that was truly global was e-mail system Nokia Telecommunications

8. Transitional Model: Challenges, and Opportunities • NTC had basic hardware infrastructure in place (WAN, LAN, hardware, OS, office Automation tools) • Connected 4 plants and 40 sales and service centers throughout the World. • The newly adopted business process approach is seen as a driver for integrated systems • Each country will share the same or similar suit of common systems for core processes Nokia Telecommunications

9. Global Logistics management Nokia Telecommunications

10. Global Logistics Management: Need • Customers want Uniformity and Consistency in dealing with NTC’s product Lines • NTC wants top reduce internal costs to ensure enough resources for business growth Nokia Telecommunications

11. Global Logistics Management: Critical Success Factors Improve NTC’s ability to Translate Sales and Marketing R&D Customer Requirements Complete Package of NTC Product and Services Production Customer Support Communications Link Nokia Telecommunications

12. Global Logistics Management: Critical Success Factors Responding Administrative Areas Transactional Levels Cross-Divisional Means to Local Offices to gain access to new product information residing anywhere within the NTC Information About Production and Delivery times Nokia Telecommunications

13. Pacing and Sequencing of Process and IT Changes Nokia Telecommunications

14. Simultaneous IT & Process Change? Nokia Telecommunications

15. Simultaneous IT & Process Change? Nokia Telecommunications

16. Simultaneous IT & Process Change? • NTC Concentrated on Making changes in organizational structure and providing new technology support while leaving the process changes in the hands and discretion of the local management. • In US business reengineering is top down. In Europe esp. Nordic region employees are consulted for job-elated design. • Changes are made by pull from external environment and customers rather than push from top management. • On the surface the structural changes looked drastic, in reality they were more gradual • Account Managers will report to country and area management rather than product division. • Account managers were also needed to have in depth knowledge about Product offerings. Nokia Telecommunications

17. Global Reengineering Project Management Nokia Telecommunications

18. Global Reengineering Project Management High risk: • State of the art technologies • Unstructured requirements • Large project (McFarlan Risk Framework) Nokia Telecommunications

19. Global Reengineering Project Management Management of the Project: +ve Aspects • Systems goals are synchronistic with market needs(responsiveness and operational efficiency) • Fundamental information needs were explored before any code was developed. • NTC thought through its business strategy and processes before embarking on a systems project. • NTC considered the reuse of an existing system(TRS logistics system) and an off-the shelf package for part of the system(it decided against both) Nokia Telecommunications

20. Global Reengineering Project Management Management of the Project: +ve Aspects(contd) • The system architecture is flexible (standardized message-based interfaces between modules that are divided into global and local units) • The project champion understands the day-to-day needs of the end users. • NTC followed a phased approach to the implementation • NTC installed a common baseline system with options for local customization and add-ons. • There were executive visits to all the sites to sell the system Nokia Telecommunications

21. Global Reengineering Project Management Management of the Project: -ve Aspects • The project is overly ambitious • The project manager had little large scale information systems implementation experience. • NTC had no prior organizational experience in implementing global systems; it is unclear whether any staff had any experience of this sort. • There were too many IT people and outside consultants relative to the number of local managers with extensive sales function experience. Nokia Telecommunications

22. Management of the Project: -ve Aspects(..contd) • There was a lack of internal IT expertise, resulting in system maintenance and upgrade problems. • There was too long a lag time between the start of the project (early 1993) and when the field units witnessed the first release (mid 1995) • There was limited acceptance from employees ranging from reluctance to resistance to giving up locally developed systems or home-grown systems. Nokia Telecommunications

23. Critical Success Factors For Global Implementation of IT Nokia Telecommunications

24. Critical Success Factors for Global implementation of IT • Manage the field’s expectations of the benefits; it will take time for the field to adjust to the system and see the tangible value from it. • Choose pilot sites where there is a real potential to see reduced delivery times to customers. • Continue communicating to the field, stressing the system’s benefits (i.e. , personal benefits for account managers.) Nokia Telecommunications

25. Critical Success Factors for Global implementation of IT • Recommend to the steering committee that incentives be instituted for the systems use • Do an analysis of the “grassroots applications” and understand what is common among them (and make sure the international logistics incorporates them, even if in a later release) Nokia Telecommunications

26. Key Summary Lessons • The transnational model is an ideal,ever-changing target. • Electronic mail is the only truly transnational system supporting NTC globally; yet a transnational model calls for vertical, horizontal, external and temporal integration. • The global logistics process and systems will improve global operational efficiencies and organizational learning, reduce lead times, and improve quality of deliveries and after-sales customer service. • Cycle time for IT and structural changes differ resulting often in delayed IT implementation Nokia Telecommunications

27. Key Summary Lessons( contd) • Global reengineering projects require continual “pull” from the field. • Global reengineering projects fail if seen as a “push” from the HQ • Local customization must be managed. • Global reengineering is a fine dance of international diplomacy. Nokia Telecommunications