Read this article and Answer the following questions in your own words: Timberja
ID: 366436 • Letter: R
Question
Read this article and Answer the following questions in your own words:
Timberjack Parts: Packaged Software Selection Project
On the morning of December 15, 1995, Jim Utting, general managerParts at Timberjack Corp. in Atlanta, pondered the decision that he and his project team were about to make. The project team, which included three members from Atlanta and three from a sister parts operation in Sweden, had been given the task of selecting the same packaged software to be used on both sides of the Atlantic. While both operations were very similar in terms of sales volume and number of personnel, Utting couldn’t help but recognize the differences in opinion with regard to software requirements. While Utting had overall responsibility for the selection process and was in a position to make a final decision, he felt that his project team should come to consensus.
Clearly a consensus would be reached only by compromise, and the group had already made so many to get this far. While selecting software used by excellent distribution or wholesale companies was the goal at the outset, the requirements of strong local support on both sides of the Atlantic, as well as a UNIX platform forced the list to include mainly enterprise requirements planning software companies which specialized in manufacturing software. Sahlqvist, president of Timberjack Parts AB, frequently asked during demonstrations, “Do we have to start manufacturing to use this system?”
While Utting and Sahlqvist tried hard to form a single team, geographyand to a lesser extent, culturehad worked against this. As Utting explained: “When the Swedish group came over here, and we went out on site visits together, and spent time together, by the end of the week we would be one team. After a few weeks on our own, we would quickly drift apart.”
Industry Background
Timberjack was the world’s leading manufacturer of heavy equipment for the professional logger, with an overall market share of roughly 25%. Its owner was Rauma Oy, a Finnish conglomerate that was listed on both the NYSE and the Finnish stock exchange. In 1995, Timberjack had sales of 627 million USD, net profits of 88 million USD, and roughly 1,600 employees. Timberjack and a few other large competitors such as John Deere, Blount, Caterpillar, and Valmet, had maintained the dominant share of the market over the long term. Many smaller firms also participated with specialized equipment that met a niche market. The Timberjack group was formed through a number of acquisitions during the 1980s and 1990s.
The evolution of logging equipment had dramatically changed the way that logging was done worldwide. While felling trees with chain saws and using animals to haul felled trees was still practiced, these methods were disappearing. In North America, trees were cut down using machines called feller bunchers, then dragged to the roadside by skidders, where they were trimmed by delimbers, and then lifted on to log trucks using log loaders. In Scandinavia, harvesters would cut and delimb trees in the forest, and then a forwarder would carry the logs to the roadside. This method allowed the logger to selectively harvest the forest rather than clear cutting.
The industry was extremely cyclical, as it was directly tied to the prices of pulp and lumber, which were in turn highly dependent on the overall strength of the economy. During severe downturns in wholesale pulp and lumber prices, annualized machine sales could fall by 75% with very little advance warning. A typical downturn lasted one to two years, and often many of the leveraged dealers, contractors, and manufacturers would not be able to weather the storm. For this reason, many capital projects were completed during the prosperous years.
Timberjack Parts Operations
Timberjack operated two service parts operations to service its equipment worldwide; one in Marsta, Sweden, which was located just outside of Stockholm, and one in Atlanta, Georgia. Both facilities were opened in 1994 and involved the relocation of personnel from other locations. In 1995, each facility had approximately 35 employees and sales of roughly 35 million USD. The European operation sold most of its parts directly to company-owned retail stores in Scandinavia; in North America, Timberjack sold exclusively to third-party heavy equipment dealers. In Scandinavia, Timberjack’s parts operation relied on a software system known as DAIM which was acquired in 1987 and ran on an AS400 platform. Timberjack in Atlanta relied on Hewlett-Packard’s MM3000 software designed to run on HP3000 hardware. This system, originally acquired in 1981, included a custom-coded dealer module developed in the early 1990s. The dealer module allowed dealers dialup access to electronically transmit orders and inquire on the price and availability of parts using a PC acting as a dumb terminal. Roughly 80% of all Timberjack North American orders were placed on the dealer system.
The Need for New Software
In early 1995, Sahlqvist and the Marsta group were actively investigating the acquisition of new computer software to run their parts operations. The main impetus behind the decision was the instability of their existing systems. Heavy modifications of their source code over the years had led to frequent system failures. As a result, the users could not always rely on the data that was presented to them. For these reasons, Sahlqvist actively sought a new computer system, with the intent of installing the system by early 1996 at the latest.
At the same time, at the Timberjack North American headquarters in Woodstock, Ontario, Canada, Coopers & Lybrand was helping top management outline a future information systems strategy. This project included the integration of manufacturing, the dealer network, as well as parts and service. While Woodstock was in no hurry to replace all of its systems, it did face the year 2000 problem; more importantly, Hewlett-Packard had notified customers that it would no longer be supporting its aging MM3000 software. After several months on site in Woodstock, Coopers & Lybrand prepared a strategic IS plan. The strategy concluded that Timberjack would benefit by selecting best-of-breed software to run the various units within the North American operations. Rather than relying on one package to run manufacturing, parts, and service, it was proposed that a strong “distribution company package” would best serve parts, and a separate manufacturing system would best suit the factory.
The Coopers & Lybrand recommendations to the North American headquarters were subsequently presented to the board of directors in Helsinki, Finland. Mikko Rysaa, president of Timberjack Group, concluded that a more global software strategy would be beneficial to Timberjack. The headquarters office in Helsinki continually struggled to compare financial results of the various units, with only marginal success. One financials package would help solve this problem. Integrated systems implemented worldwide would also make it easier to send employees overseas for a few years, as there would be no need for them to learn new computer software. Global selection would also add leverage to negotiations with software and hardware vendors. For these reasons, Rysaa felt that Timberjack should embark on a global software strategy.
The service parts organizations were subsequently given the task of selecting one system to run the parts businesses in Atlanta and in Marsta. Rysaa appointed Utting to head up the project, and instructed Sahlqvist to halt the process of choosing new software independently. Instructions to Utting were fairly clear; he was to gain consensus on one package for both sites, and he was told “There will be no disasters.” If the two groups failed to reach consensus, then the Timberjack board would decide. Rysaa had warned Utting in his usual dry humor, “The intelligence level does not always go up when the decision is made by the board.”
Over the next week, Utting and Sahlqvist decided on project team members, as well as a rough timetable. On April 17, 1995, the joint project team had its first meeting in Woodstock, Ontario. The team members present were Christine Smedjer, IS manager in Marsta, Jorma Nikkinen, materials manager in Marsta, Mark Gonzalez, information services coordinator for service parts, Darryl Romanow, materials manager in Atlanta, as well as Utting and Sahlqvist. Coopers & Lybrand appointed Ilya Bahar to the project, although Timberjack had not yet decided on the extent of the Coopers & Lybrand involvement.
Both organizations were in considerable transition at the time the project began. In April 1995, the team members were at various stages of relocation to the new parts facilities, in Atlanta and Marsta. Utting, Romanow, and Gonzalez lived near the Woodstock, Ontario factory. Utting was to relocate to Atlanta in May; Romanow was moving at the end of June; while Gonzalez had not yet decided whether he was going to move to Atlanta. While the new parts facility in Atlanta was opened in February 1994, it consisted of the distribution center staff, one buyer, and three accounting staff, all of whom were new to Timberjack. Marsta was in a similar situation, as Timberjack had closed its parts operations in Tampere, Finland, and Alfta, Sweden, and combined the facilities into one in Marsta. While Smedjer was recently hired from the Marsta area, Nikkinen continued to commute on weekends from Tampere (central Finland), and Sahlqvist commuted from Gotenborg, a three-hour drive from Marsta.
In the spring of 1995, the North American operation had the core group of parts buyers, customer service, and accounting staff still working in Woodstock. Although most were offered positions in Atlanta, very few were contemplating the move. Most members of the group were actively searching for new positions in the factory operation. Utting felt that he had a narrow window of opportunity to gain input from this group of people who averaged 20 years’ seniority. Utting’s primary concern was that the commitment to the project might be limited as many of the people would be leaving the parts department.
At the end of the first meeting, it was decided that Bahar would be invited to bid on the software selection contract and that the requirements definition would be done in Woodstock, with a sign-off in Marsta. Romanow and Gonzalez would work with Bahar during May and June, with a request for proposal (RFP) to be mailed to vendors in late August 1995. In order to free up time for Romanow to work on the project, Utting decided that an interim supervisor, reporting to Romanow, would remove him somewhat from the day-to-day activities. Jim McGregor, a 40-year employee and a senior buyer in the parts department, was given the task. McGregor had already decided that he was not moving to Atlanta and that he would likely retire at the end of the project.
The Qeustion: Talk about the reasons which motivated Timberjack Company to get a new software.
Explanation / Answer
Talk about the reasons which motivated Timberjack Company to get a new software.
Timberjack had two service parts operations to service its equipment
The Swedish operations were suffering from instability of system and system failures ( due to heavy source code modification) leading to errors and unreliability of data
The Atlanta operations used Hewlett-Packard’s MM3000 software. Around 80% of all North American orders were using this system to place orders Hewlett Packard announced that it would not be supporting the aging software (MM3000) used by Atlanta operations
North American headquarters in Woodstock, Ontario, Canada,
At the headquarters, they faced, ‘the year 200o problem- Y2K’ in the existing software. They wanted to find alternatives for the HP software in Atlanta while integrating manufacturing, service, parts, and dealer networks in America
The headquarters office in Helsinki
Here the company faced difficulties in comparing financial results of business units across the globe. They needed a good financial package.
Employee transfer across global operations is an issue due to different softwares in different regions. A new global platform software will help them to solve this problem
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