Irst Meets Japanese Company

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When ERP first meets Japanese company
-reflection on Naniwa Hitech case study

Abstract: In the early 1990s, Japanese manufacturing companies’ proudest plant-level optimization became no longer competitive in the context of new global environment. A lot of competitors had caught up matching equal production efficiency and the key to maintaining continuous leading position lies in standardization of business process and integration of information management system. However, Enterprise Resource Planning (ERP) system, packaged software arising out of this new demand and popular with both the US and European market found its entry into Japanese market slow. By the late 1990s, Japanese firms had lagged way behind their European and American counterparts in ERP adoption. Thus, this paper aims to analyze reasons behind Japanese companies’ slow adoption of ERP during this period based on case study of Naniwa HiTech and then goes further to explore factors conducive to Naniwa’s final success in ERP implementation. Key words: ERP, BPR, CSFs As the most revolutionary package software developed in the 1970s and expanding fast across major western countries throughout the 1990s, Enterprise Resource Planning (ERP) system unified information management system of the entire company with coverage of all majors functions such as accounting and finance, sales and service, procurement and manufacturing, human resource, etc and facilitated information flow astronomically. In spite of all its advantages, it encountered setback in Asian market in the 1990s, particularly in Japanese market where most of the local manufacturing firms reserved a reluctant stance in its adoption though they were indeed in need of a new integrated information system as a replacement of 1

their current legacy system to achieve further efficiency because their optimization efficiency in production had been emulated by many other competitors. Naniwa HiTech was one of early adopters of ERP “whereas many other Japanese corporations have faltered or even refused to try [1, page2]” because there’s hardly any trace of evident success stories purporting to those claimed benefits by ERP vendors. Many companies which installed ERP seldom appreciate its merits and some even ended up with wasting money. This situation is approximately the same in other countries as well, but it is particularly serious in Japan partly due to a lack of understanding among Japanese corporate managers about the concepts of the information systems and how they can be used within their unique Japanese managerial style [2]. There was once an interview carried out on a Japanese ERP consultant who shared a view as generally agreed by most Japanese ERP specialists that if ERP was implemented and the company’s workflow would still run smoothly, then the installation of ERP was successful [2]. However, this kind of viewpoint neglected the deeper and more important consideration on the part of the companies who measure the success of EPR implementation based on whether business efficiency was enhanced and whether final return on investment was worthy of this effort rather than simply avail of ERP to keep its smooth workflow running. This difference in expectation between ERP providers and Japanese companies contributed to the few success story scenario and resulted in reluctance of ERP adoption in Japanese companies at that time. Moreover, it has been argued that Japanese firms were used to customized software to meet their specific needs while ERP, as an off-the-shelf packaged software, is usually designed for multiple diverse users, so specific needs of Japanese companies are not always met [2]. In Naniwa HiTech, there were indeed some critical areas where ERP could not fulfill the required functionality. Many practices common in Japanese corporate business, particularly methods for accumulating sales revenues, purchasing cost and customary retirement pension plans for employees, widespread company...
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