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Flux Forward

Flux Forward

Flux Forward

Ken André, group information systems manager for global packaging company Huhtamäki Van Leer, has something that he didn't have when growing up in Chicago - the accent over the final letter of his name. Despite his French origins, he says laughing, such niceties were out of the question: American typewriters and computer keyboards just don't do accents. Now, thanks to his job as the senior IT executive in one of the world's largest manufacturers of packaging for the food, food service, oil and chemical industries, André's name is as international as his role.

It's a role that calls for him to spend about 60 percent of his time away from his office in Essen, a small town close to Belgium's Dutch border in the province of Antwerp. Frequent stopping-off points on his travels include company headquarters in Espoo, Finland (the company was formed in 1999 from the merger of Finnish conglomerate Huhtamäki Oyj and Netherlands-based Royal Packaging Industries Van Leer NV), the United States and many European countries. While each national subsidiary has people on the ground handling the operational nuts and bolts, André's small corporate team "does the global stuff - setting the standards and helping to execute them," he says. Given the drastic reshaping that the business has experienced in recent years, the ink is barely dry on one set of plans before another is on the drawing board.

Premerger, Van Leer had more than 14,000 employees and 140 operations in 43 countries, while Huhtamäki had more than 7,000 employees operating across 40 sites in 28 countries. Integration - not to mention Y2K, Europe's fledgling single currency and other such details - was clearly going to be a tall order.

But André, who joined Van Leer in Chicago in 1989 and moved to the Netherlands two years later, had one major factor on his side: Both Van Leer and Huhtamäki had implemented the BPCS enterprise resource planning package from System Software Associates. "Having BPCS on both sides was a tremendous blessing," says André. "If we'd had different systems, it could have taken a year to sort out a strategy. As it was, it took no more than a month to put an integration plan together.

However, in early 2000, the Huhtamäki Van Leer board decided to divest its Industrial Packaging Division in order to concentrate on product areas where it could command global or regional leadership. The move, which was executed at the end of February, will shrink the company's focus to consumer packaging. It will produce containers for the food and food service industries, generating around 2.5 billion euros in revenues (roughly US $2.3 billion) and employing around 15,000 employees in 34 countries.

The result is an organization in temporary flux. The Belgian production facility has already been sold. And by the time you read these words, it's likely that another divestment will have taken place, involving the sale of more than 100 locations in 44 countries.

For André, the combined processes of post-merger integration and pre-divestment due diligence have prompted some fascinating insights into global divergence. Take e-business, for example. In the United States, Web-based order-entry systems with track-and-trace head the wish list. The European and Asian operations have been much more focused on e-procurement, says André. Partly, he thinks, the difference is cultural and reflects a reluctance in some parts of the world to lose the personal touch with customers. But partly, too, the divergence comes from viewing business from a different perspective. "In Europe, we've historically had a much greater emphasis on EDI-enabled B2B, where ERP system talks to ERP system - and so a Web-based system appears a step backward to a manual process," he says.

In the United States, he adds, "everything is oriented toward speed. In Europe, there's more focus on the process, which is why you see more emphasis in Europe on ISO than you would in similar companies in the United States." At American plants accustomed to supplying customers who stipulate just-in-time lead times of half a day or less, there simply isn't time to wait for the batch-based MRP runs that for the moment satisfy Europe's EDI-centric customers.

The exigencies of doing business in so many countries also shape the structure of the company's information flows. Despite Huhtamäki Van Leer's global reach, explains André, 90 percent of the company's business, especially in the Industrial Packing Division, is not cross-border, but takes place in a single country, with in-country plants supplying that country's customers. Consequently-and perhaps surprisingly from an outsider's viewpoint-André has insisted on building a global network that carries only information that is meaningful at the corporate level. Detailed ERP transactions, for example, mostly don't flow through it all: At a group level, there isn't a requirement for invoice or order-line detail, he explains.

Instead of a global wide area network (WAN), a batch-replicating Lotus Notes-based global intranet connects each of the company's locations around the world. And instead of highly granular transaction-level data, it carries only information that adds value to Huhtamäki Van Leer outside the country where it emanated-such as consolidated sales information, group financial accounting reports and some customer relationship management data.

Not that "connect" always means the same thing, everywhere, André stresses. Telecommunications are so problematic in India, for example, that for the last six months of 2000 the company was obliged to completely sever its secure online ties with its India-based applications, relying instead on external e-mail through a simple mail transfer protocol gateway, supplemented by couriered CD-ROMs.

A globe-spanning WAN approach is not impossible, André explains - it's simply that the benefits it would confer, compared with the costs of installing and maintaining it, make it impractical at the moment. Rather than internal corporate dictates influencing the decision, the way in which its global customers and suppliers wish to communicate with the company will dictate the switch away from the intranet. "It's probably the most difficult decision to make: not how to shift, but when to shift," André says.

And only when that timing decision is made, he says, will the company choose a technology to use: "A couple of years ago, frame relay was the in-thing in Europe; now it's IP networks," André says. If there's one lesson he's learned, it's that when playing on a global stage, it doesn't pay to get too far ahead with technology: Things change fast. "Move too soon, and you risk locking yourself into a technology that's not appropriate."

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