Heineken Netherlands B. V. : Reengineering IS/IT To Accredit Chump – Oriented Accumulation Alternation Administration In June 1993, Jan Janssen, banking administrator of Heineken Nether acreage B. V. and the actuality amenable for Advice Systems (IS) and Advice Technology (IT), and his IS manager, Rob Pietersen, faced the claiming of developing an IS/IT agreement that would add amount to the business and abutment the advancing transformation of Heineken's accumulation alternation administration system.
This arrangement was extensive, not alone bartering the Dutch home market, but additionally accouterment a cogent allotment of the accumulation to added than 100 consign countries served by the Heineken Group. Accumulation alternation administration axial to enterprise-wide transformation. Administration was committed to a process-driven organization, chump annual partnerships, 24-hour commitment advance time, above innovations in the carriage system, and constant changes in the way bodies worked. And Janssen knew that all of these-and more-required axiological changes in the way this new assignment was to be accurate by advice systems and technology.
Janssen was assertive that the able administration of advice as able-bodied as a added adapted IT basement were analytical to accomplishing Heineken's goals of added flexibility, greater coordination, and a bluff focus on chump needs. In his mind, the change affairs accomplished in 1990 in the IS/IT breadth had aloof been the beginning. Now, he and Pietersen bare to architectonics an advice systems and technology courage that would be adjustable abundant to advance with the alteration business needs and acclimate to connected changes in technology.
HEINEKEN NETHERLANDS B. V. Heineken Netherlands B. V. was the arch operating aggregation amenable for operations in Heineken's home market. It additionally accounted for a cogent allotment of Heineken N. V. 's common exports. Of the 60. 4 actor hectoliters' of beer produced common beneath the administration of the Heineken Accumulation in 1994, a cogent allocation was produced in the company's two Dutch breweries- Zoeterwoude and `s-Hertogenbosch (Den Bosch).
Likewise, 11 percent of the Heineken Group's sales took abode in the calm market, and added than 5400 advisers formed for Heineken Netherlands. Accumulation Alternation Administration The accumulation alternation at Heineken Netherlands began with the cancellation of the raw abstracts that went into the brewing process, and connected through packaging, distribution, and delivery. Brewing took six weeks; it began with the malt admixture of barley and assured with the clarification of the beer afterwards fermentation.
Depending on the administration channel, the beer was again packaged in "one-way" or returnable bottles or cans of altered sizes and labels, put in kegs, or delivered in bulk. The array of outlets meant that the aggregation had to administer differences in acknowledgment time (beer for the calm bazaar was produced to stock, while exported beer was produced to order) and three audible administration channels. While anniversary admission consisted mainly of the aforementioned accomplish from the cancellation of raw abstracts through brewing, they differed abundantly in packaging and distribution.
Beer could be broadcast to either on-premise outlets (hotels, restaurants, and cafes, breadth it was delivered in kegs or caked anon into apartment beer tanks), off-premise outlets (supermarkets, grocery and liquor stores, breadth it was awash in a array of canteen and amalgamation sizes for home consumption), or to consign markets (export deliveries were fabricated to order). Advancing Transformation With key barter requesting faster acknowledgment times, the development of a process-driven appearance of Heineken's accumulation alternation activities became critical.
The aggregation started the transformation of its accumulation alternation administration arrangement by creating customer-service partnerships with its bigger calm customers. The all-embracing cold was to advance the acumen alternation badly for these customers. In response, commitment advance times were bargain and the carriage arrangement was changed. However, the accumulation alternation transformation was apparent as a amaranthine process. New Customer-Service Partnerships In these new annual partnerships, Heineken was requested to abate the time from the adjustment of the artefact adjustment to the absolute delivery.
Before, this commitment advance time had been three days, but the bazaar chains capital Heineken to accumulation their warehouses in the Netherlands in 24 hours. Anniversary of the warehouses agitated alone 8 hours of banal at any time, so the bazaar chains depended on quick and adjustable commitment to advance low inventories and fast acknowledgment times. To added enhance its abutting cooperation with customers, Heineken had boarded on a pilot analysis of a new acumen advance alleged "Comakership" with Albert Heijn, the bigger bazaar alternation in the Netherlands.
Comakership was allotment of Albert Heijn's Efficient Chump Acknowledgment project, "Today for Tomorrow. " The Albert Heijn retail food beatific their sales advice as scanning abstracts to the computer in their axial arch office. There, the abstracts for Heineken articles were scanned out and separated. The beer sales advice was again relayed via a accustomed EDI arrangement (provided by a value-added arrangement operator) from the axial appointment of Albert Heijn anon to Heineken's Zoeterwoude brewery. Heineken was usually able to bear aural 18 hours.
Although the pilot had been accomplished in alone one of Albert Heijn's administration centers (and the set of food it served), it had already resulted in lower advance times, decreased costs, and beneath complication in the administration system. Affective to a 24-Hour Commitment Advance Tinge As a aftereffect of these successes, top administration assured that commitment advance time could be cut to 24 hours for best calm customers. However, it would crave above accouterment in the company's banal levels, administration centers, assignment organization, carriage system, authoritative structure, and advice systems.
The 24-hour advance time accustomed for greater banal about-face and for lower banal levels in the chump administration centers. There was, however, added interdepot cartage and college stocks of packaging absolute ("returnables") on the brewery bounds (which had been amid abroad forth the accumulation chain). But administration believed that as beneath absolute annual was captivated in the system, these packaging absolute stocks adeptness be bargain over time. New Carriage Arrangement Until 1991, Heineken Netherlands had apprenticed out the busline of its articles from the two breweries to about 50 transporters.
All of them acclimated a lorry-trailer arrangement with "dedicated" drivers-a disciplinarian and his "truck" could accomplish an boilerplate of 2. 1 deliveries per day. To accommodated the 24-hour advance time, Heineken had to absolutely change the agile acclimated for carriage and abate the cardinal of transporters from 50 to 10. Heineken again apprenticed 4 berth trucks from anniversary abettor (40 berth trucks in total) and paid them for the use of the trailers. The adeptness of the disciplinarian to move from one bivouac to addition afterwards cat-and-mouse for auction meant that he could accomplish an boilerplate of 2. deliveries per day (a amount abridgement of about G1. 5 actor ). New Advice Administration (IM) Needs Heineken's customer-service affiliation with Albert Heijn and the alternative changes Heineken had implemented in its accumulation alternation activities brought new advice requirements to abutment the added acrimonious commitment dictates. With the pilot testing of the Comakership acumen improvement, Heineken bare to apparatus systems which could administer this new alteration of information, and accomplish adapted modifications in assignment activities and authoritative structure.
Furthermore, the new IS/IT basement bare to be adjustable abundant to handle and reflect alone banker and chump beer purchasing patterns. In the ambience of these changes in accumulation alternation activities, Janssen reflected on the ancestry of the transformation of IS/IT: The transformation of IS/IT and the accouterment occurring in our accumulation alternation activities were circumstantial afterwards causality. That is absolute strange, but it aloof happened that way. I can't say to you that it is a "chicken and egg" affectionate of story. Of course, there was a articulation but not an absolute one. Somewhere in our minds, aback you do one you do the other, too.
Jansen knew that the accord amid advice management, advice systems, and advice technology had to be acutely authentic to accept optimum abutment for the new approaches to amount creation. Advice administration focused on acknowledging barter and creating new "bundles of appurtenances and services. " Advice systems focused on developing applications software, managing data, and acknowledging the new business processes. Finally, advice technology accompanying primarily to abstracts and argument services, and the basal operating systems, interfaces, hardware, and networks.
PHASE l: RECOGNIZING THE NEED FOR CHANGE In July 1989, at the alpha of all the changes at Heineken, Janssen (then at address and amenable for IS/IT worldwide) accustomed a appeal for a additional mainframe at Heineken Netherlands, costing G6 actor (with addition G6 actor adapted in three to four years); Janssen brought in the consulting close Nolan, Norton, Inc. to appraise the IS/IT infrastructure, aboriginal at the accumulated akin and again at the operating aggregation akin for Heineken Netherlands: A angle to acquirement a additional mainframe focused everybody on our IS/IT infrastructure.
You accept to accept some affectionate of crisis to get bodies thinking. IS/IT Benchmarking Nolan, Norton, Inc. benchmarked Heineken's IS/IT amount anatomy adjoin the cooler industry IS/IT boilerplate and it was bright that Heineken was absolutely not competitive-the aggregation was spending alert the money for bisected the functionality. "The Nolan, Norton address accustomed what a absolute advanced accumulation of the users thought," Janssen commented. In response, administration recommended decentralizing the abstracts centermost and accepting anniversary business breadth administer its own accretion resources.
At the aforementioned time, Janssen asked Heineken Netherlands, the bigger operating company, to advance a new IS/IT plan based on new computer technology, "which meant attractive for mid-range platforms, decentralized computing, and accustomed software packages, rather than developing customized programs for every new application-previously the accustomed practice. " Afore chargeless an adapted IS/IT plan, Janssen fabricated abiding that advice administration scans were conducted in every anatomic area. Managers were asked, "What do you charge and how can that acclimated to actualize advice plans.
Working with KPMG Administration Consultants and Nolan, Norton, Inc. , Janssen developed a annual of priorities for IS/IT and called a new IT belvedere (IBM AS/400)-both were accustomed in July 1990: The AS/400 became the amount of our new IT belvedere for two reasons: first, we had been a applicant with IBM for about 40 years, and it was not their accountability that we acclimated their mainframes in the amiss way; second, we already knew that huge masses of appliance software were actuality accounting for the AS/400, as a quick browse calmly confirmed.
Furthermore, we were starting to anticipate about an adapted IT architectonics and we were because the achievability of appliance claimed computers as peripherals affiliated calm through bounded breadth and advanced breadth networks. Accomplishing of the New IS/IT Plan Afore the end of 1990, Janssen was appointed banking manager. He became the actuality amenable for IS/IT at Heineken Netherlands and was to baby-sit the accomplishing of the new IS/IT plan. Janssen assured that outsourcing would comedy a analytical role in this process: The accommodation to outsource was allotment of the plan.
When we came to the cessation that a above change was necessary, that we should attending for midrange computers, that we should go for accustomed software, that we should not go for impaired terminals but for claimed computers as peripherals, it became bright to us that this was a big operation and we could not advance to it. We could not administer aloof to accumulate the old systems in the air with all the problems and accept abundant administration absorption for architectonics up the new systems. So we told the organization, "Gentlemen, we are action to outsourcers, and we are action to benumb the applications to chargeless up administration time. PHASE 3: OUTSOURCING TO DEVELOP THE NEW IS/IT INFRASTRUCTURE Outsourcing enabled the IS accumulation to accumulate the "old" mainframe applications active while it developed a new IT approach-focusing on the development of its client/server broadcast processing infrastructure, the adapted new IT architecture, and the IS bodies and abilities to accomplish these new objectives. Outsourcing In 1991, afterwards scanning the outsourcers' market, Janssen chose Electronic Abstracts Systems (EDS), the bigger provider of computer casework in the United States.
EDS provided the ability and basement adapted to accommodated Heineken's advice systems and technology needs, and career possibilities for Heineken's mainframe personnel, both basal to the acknowledged transformation of its IS/IT infrastructure. Finally, the five-year arrangement (with crumbling captivation anniversary year) provided "guaranteed continuity" while Heineken maintained control. The plan adumbrated that the aftermost mainframe affairs would be replaced in 1996 and the arrangement with EDS would end. Development of the New IT Architectonics The development of the new IT architectonics took abode about concurrently:
We confused in two directions-one, to outsource our operational concerns, and two, to focus on our new architectonics development, eventually replacing aggregate which was on the mainframe with accustomed bales on AS/400s. With the accommodation to downsize-to move off the mainframe platform-and to decentralize the advice administration and systems, Janssen chose a absolute client/server action appliance a aggregate of workstations, bounded and advanced breadth networks, mid-range systems such as AS/400s, and bounded breadth servers to complete the technology architecture. (Refer to Figure 1 for Heineken’s IT architecture. “Personal computers” became “Heineken workstations" to annihilate the abashing and "mess" of accepting 2000 "personal" workstations-in this way, every workstation had the aforementioned setup. Furthermore, the sales force began appliance "Notebooks" for chump analysis and advice sharing. Alteration Over to Accustomed Bales and Developing Greater Adaptability to Serve the Business In 1993, Rob Pietersen became IS administrator at Heineken Netherlands. He believed that the decentralized IS/IT operations gave added "computer ability to the people," and enabled the "user" to become the action owner.
Old mainframe programs were replaced with new accustomed appliance bales that covered all the functions in the accumulation chain. Heineken started this "changeover" by absorption on the software applications ambidextrous with clients: adjustment entry, delivery, transport, invoicing, and accounts receivable. Selecting Accustomed Software Bales To admission adaptability and chump responsiveness, Pietersen knew that Heineken had to about-face from the "waterfall approach" to the development of accustomed software packages: At that time in the mainframe orld, we were developing software applications appliance a alignment generally referred to as the "waterfall. " You started with a requirements analogue from the users, developed a architectonics and the cipher to apparatus that architectonics (getting signoffs at anniversary point forth the way). You put the cipher in production, activated the code, appear the cipher into operation and again you maintained it. Aback you adopted the code, you went aback to the users and asked them if this was what they wanted, and generally they said "What? This avalanche action took 18 to 36 months or more, and by the time it was completed, the users' requirements generally had changed. Pietersen began appliance the PILS (Project Integral Logistics) - called afterwards the acknowledged admission developed to baddest adapted acumen software - to analysis and baddest accustomed software bales (refer to Figure 2). The PILS admission involved: Oidentifying adapted software packages; Osetting the top two amalgamation vendors adjoin one addition in a "shoot-out” as in the American "Wild West"-where the specific elements of anniversary software amalgamation were compared and contrasted;
O implementing it; O evaluating its performance. For IS people, this meant affective from COBOL programming to developing a absolute ability of the business. Pietersen chose PRISM for the acumen breadth and J D Edwards for the banking area. Pietersen begin that the new systems and behavior bigger fit the advice needs of the company: We bare added flexibility, added power, and beneath cost. Our accepted systems accept denticulate aerial in anniversary of those areas. Computer ability is now breadth it belongs: not with the IT people, but in the calmly of the bodies who charge it. IS Accumulation Reconfiguration
Outsourcing the mainframe and mainframe applications to EDS led to a change in the agreement of the IS accumulation as well. Contracts with advisers from software houses were stopped, and abounding of the individuals alive on the mainframe went with the mainframe systems to EDS while alternative agents confused to alternative areas of the IS group, such as systems management. Pietersen was assertive that the competencies and capabilities of the IS accumulation had to be broadcast to adjust the use of IT with the evolving accumulation chain, rather than artlessly announcement IT solutions as "answers" to the company's advice administration "problems. Pietersen accepted that this change in admission for the IS accumulation adapted not alone a added ability of business processes and strategy, but additionally an compassionate of how bodies acclimated the information. Pietersen accordingly adapted the IS administration from units for appliance development, chump support, and operations (a anatomic structure) to teams solution, and customer-service areas-the "process owners" (a team-oriented business approach). (Refer to Figures 3 and 4 for the IS alignment afore and afterwards 1993. The advice administration needs of the business areas were appropriately authentic by bodies from both the business areas and IS. These annual teams helped baddest accustomed appliance bales and, afterwards, acclimate the business action to the software amalgamation or acclimate the software amalgamation to the business process. These teams appropriately developed and implemented systems that gave the adapted abutment for the corresponding business processes and delivered advice to accredit a bigger ascendancy of the accumulation chain. Shrinking from 130 to 40 people, the IS accumulation was now "doing what they had been accomplishing differently. Pietersen and Janssen believed that accretion all-embracing admission to advice would abutment management's efforts to enhance the employees' empowerment. Client/server systems additionally fostered teamwork and accumbent accommodation making. They were fast, flexible, and acceptable greater advice with barter and suppliers, which resulted in bigger chump service. And they answer the development of a "process view" (focusing on absolute processes rather than on detached tasks). Furthermore, the new agreement of the IS group, with its added team-oriented business approach, additionally answer a spirit of greater cooperation and communication.
Pietersen commented, "If we still had the mainframe, all this would not be possible. " Evaluating IS Achievement In 1995, Pietersen and Janssen were still aggravating to actuate how to admeasurement the achievement of the IS/IT department. They agreed that IS/IT bare to serve the business, and altered annual akin Agreements were to be adjourned with the altered anatomic areas (as apparent in Figure 5): What is our business? Is it advice technology? No, our business is brewing and affairs exceptional beer of aerial quality.
We afflicted our IT action to accomplish it bright that IT supports the business, but doesn't drive the business. We started to focus on accepting a admirable basal band rather than admirable IT applications. IS achievement again became based on the adapted and acknowledged achievement of projects. The best important admeasurement was the advance of the business action for which a arrangement or annual was meant. In the future, Pietersen and Janssen would be aggravating to advance belief to admeasurement the appulse of an IS action on convalescent all-embracing business performance.
INFORMATION ASSETS IN THE BUSINESS Controlling Advice Systems (EIS) By 1995, Heineken's operational accumulation alternation system-from supplier to end customer-was in its final phase, and the aggregation had amorphous to add the accommodation abutment element. Decision-support or controlling advice systems would accomplish it accessible for managers to accurate their advice requirements directly. Pietersen hoped that their affluence of use would animate managers to assay accomplished achievement in greater abyss and accredit them to simulate the accessible after-effects of proposed accomplishments added accurately.
When it came to selecting the adapted software, Pietersen had called EIS Express: I alarm it the abstruse infrastructure; the basal analytic basement of all these systems is in place, and now we appear to enabling absolute improvement, not aloof the EDI links we accept with our retailers, but additionally such things as installing controlling advice systems (EIS) to accord our administration aggregation the ascendancy instruments they charge to cross us through the added agitated business environments we will face in the advancing years.
The controlling advice systems accumulate their abstracts from the abstracts warehouses of the altered business systems in all areas and can appearance this calmly through altered (graphical) viewpoints. One of Janssen and Pietersen's goals for the use of controlling advice systems was to accept accord in the data. Janssen explained: Accepting accord in our abstracts is crucial. Alone a few years ago we apparent some departments were appliance altered assemblage volumes than we were. And that aloof should not appear in any organization. Bigger Planning Tools
A key allotment of the IS/IT action was to advance an chip set of systems to plan and ascendancy the all-embracing accumulation chain, both in the abbreviate run (bottle-line scheduling and circadian operations) and over a best border (sales forecasts and abiding operations research). The aim was faster and added adjustable ascendancy of accumulation alternation activities. Jan Janssen elaborated: What we are alive against is a articular and constant set of planning and scheduling accoutrement which are added or beneath accordant and interconnectible so that you can body up or body bottomward the basal data.
Our ambition is to be able to archetypal business processes and to accept the data, like sales forecasts, to abutment our decisions about capacity, bottling lines, and stocks. We appetite to be in a position where, if you accept to accomplish a decision, you can run simulations based on absolute data. The abstraction of accumulation alternation administration ultimately served as the disciplinarian for to optimize the accumulation alternation activities as able-bodied as to ensure bigger advice management. (Refer to Figure 6 for Heineken's advice systems. )
Janssen and Pietersen had put in abode advice systems to aggregate and accommodate advice on Heineken's "on-premise" chump activity. Advice on anniversary hotel, restaurant, and cafe/pub that Heineken Netherlands had acquaintance with (as owner, costs agent, or artefact supplier) was included in these systems. In this way, Heineken Netherlands was able to accommodate the accordant sales force with an chip appearance of their barter (large or small) as able-bodied as with advice on competitors accouterment to the aforementioned establishments, beer sold, and arrangement terms. Janssen elaborated:
We are cerebration about what the "next date of the rocket" will be. We accept authentic the baseline and are attractive at workflow, EDI and planning advice systems-how should these planning systems interrelate? We are in the action of defining the abutting appearance of the eyes for Heineken as a business in the Netherlands and for the IS/IT fit to that. The accepted agitation is aloof how far to go. This case is a abridged adaptation of Heineken Netherlands B. V. A&B. It was able by Analysis Associate Kimberly A. Bechler beneath the administration of Professors Donald A. Marchand and Thomas E.
Vollmann, as a base for chic altercation rather than to allegorize either able or abortive administration of a business situation. The names of the Heineken managers complex accept been disguised. It was developed aural the analysis ambit of Accomplishment 2000, a analysis and development action conducted with all-around accomplishment enterprises. The authors ambition to accede the acceptable abetment of Heineken management, abnormally IS administrator Gert Bolderman. Copyright @ 1996 by IMD- Institute for Administration Development, Lausanne, Switzerland. Not to be acclimated or reproduced afterwards accounting permission anon from IMD.
CASE STUDY QUESTIONS 1. Assay Heineken Netherlands appliance the amount alternation and aggressive armament models. Why did the aggregation feel it bare to transform its accumulation chain? 2. Assay all the elements of the new IT basement that Heineken called for its new business processes. Were Heineken's technology choices appropriate? Why or why not? 3. What management, organization, and technology issues had to be addressed aback Heineken Netherlands reengineering its accumulation chain? 'Hectolitre = 22 Imperial gallons = 26. 418 U. S. gallons; Heineken 1994 Annual Report. 21000 Guilders (G) = about ? 368 = U. S. $575 (at December 31,
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