TABLE OF CONTENTS
1. AVNET – DEVELOPING SYSTEMS TO SUPPORT GLOBAL
2. OFFSHORE OUTSOURCING – GOOD BAD OR DOES NOT MAKE A
3. COLGATE-PALMOLIVE KEEPS THE WORLD SMILING
You probably have not heard of Avnet Inc.—or its leading competitor Arrow Electronics—but chances are the computer you are using these days has components purchased from one of these distributors, if not the entire computer. Avnet is number 212 on the list of Fortune 500 firms, and number three on InformationWeek’s list of most innovative users of information systems. Avnet and Arrow are two American-based firms that together dominate the world market for electronic parts, connectors, components, and computers, with a 60- percent global market share. While locked in competition for the remaining 40 percent of the world market, Avnet and Arrow have each adopted different business strategies for future growth, and each has a different idea about how to use information systems to support corporate growth. Beginning as a radio-parts distributor started by Charles Avnet in 1921 in New York City, the company went public in 1959 and was managed by his sons. Since 1991, the company has been on a growth tear, purchasing 43 companies including British semiconductor distributor Access Group. About 60 percent of its business involves component distribution, and the rest distributing computers which it purchases from computer manufacturers and resells to corporations and large retail outlets. Avnet, like Arrow, is a middleman between manufacturers and ultimate end users. It’s also a key supplier of industrial electronic components to the computer industries. In 2001, Avnet had completed its expansion in Europe, and began moving into China and Asian markets by purchasing China’s Sunrise Technology. In 2005, it purchased Memec Group Holdings, a $2 billion purchase of China’s largest electronic components distributor. Because it was so dependent on acquisitions and rapid integration of newly purchased companies, Avnet developed what it calls its “Cookbook” for acquisitions. Composed of more than 1,000 pages stored on Avnet servers, the Cookbook contains Avnet’s accumulated wisdom on how to integrate new companies into Avnet’s business process and information systems. It has chapters on human resources, finances, IT/IS, logistics, materials, sales, and marketing. You can think of the Cookbook as an encyclopedia of business processes for Avnet. Rather than force all its acquisitions to adopt Avnet’s American systems, Avnet has divided the world into three regions, each with its own regional enterprise resource planning (ERP) and related systems. The goal was—for the sake of speed of integration of newly acquired companies—to integrate new acquisitions tightly and smoothly within each region, and allow regional managers a certain degree of freedom in choosing how they organized their business within the region. When acquiring new companies, it tries to use the best systems from each company and not always its own. In the case of Memec, it chose to use the Avnet regional Asian system rather than Memec’s own global system because it would lower the costs of training Avnet employees who otherwise would have to learn an entirely new system. Avnet successfully integrated the Memec business and employees into its Asian system. Avnet now runs two regional ERP systems: SAP in Asia, and a custom-built mainframe system called Genesis in the United States. In Europe, Avnet runs 10 different SAP systems, nearly one for each European country where it does business, but it is attempting to consolidate...
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