The fact that Brose is a family company with a long-term orientation helped us a great deal. Our shareholders and management pursue a “calm hand” strategy. In the process, they rely on the long view and stability ”“ and give us the time we need to concentrate on our strengths and our business, and to use the crisis as an opportunity.
You closed a factory in the US and cut working hours here. You also eliminated 1,500 jobs globally. Is that what a “calm hand” looks like?
With the onset of the crisis, we set an appropriate course very quickly and forcefully to adapt our organization to the structural and economic changes in the industry. So we introduced reduced working hours in our German facilities; in North America, where this option is not available, we carried out short-term shutdowns and concentrated our productive capacity in the plants that were operating. Unfortunately, we also had to close a factory. We could not avoid cutting 1,500 jobs -- mostly temporary ones -- globally to deal with massive underutilization. Due to an emerging increase in demand, however, we nearly equalized employment levels in the second half of 2009.
Let’s talk about IT. What tasks are on the agenda in this area?
The integration of the Continental electric engine division is one of our greatest challenges. We didn’t acquire a complete company, but rather separated off a business unit that is not operational on its own. That’s why, with our own resources, we had to quickly supply all the functions that were not part of the acquisition. They included, for example, corporate services such as wage and salary accounting, and systems for supplying operational information through the company portal. Our IT had to take on a user growth of 40 percent very quickly ”“ and do it extensively and permanently, without additional capacity.
How did you accomplish this?
We were able to bring all IT tasks associated with the acquisition proactively, by means of very detailed project planning, into harmony with our daily business. For example, the introduction of an SAP system in Portugal had been scheduled for fall 2008, and we moved it up by six months. In this way, there was sufficient manpower available during the first, heated phase of integration, making it possible to implement important measures at precisely the right time. We also worked on our efficiency, by improving our roll-out methods. Being fast is a basic Brose business principle ”“ and not just in IT. Economies of scale further increased efficiency, and they took effect quickly due to our standardization.
Have you stepped on the gas all the way?
We have clearly differentiated between absolutely necessary projects, very attractive projects, and ones that it would be reasonable to realize at some point in the future. This weighting always takes place in coordination with the departments. We have played a very active role in this, since we definitely see ourselves as a business driver. We always examined technical innovations according to whether they help us differentiate Brose from the competition. It’s our job to stimulate the departments and inform them pro-actively on what is feasible and makes sense technologically. Just reacting to requests would clearly fall short.
Brose IT is said to be very centralized”¦
Right. We interpret and live by the term “centralized” in a way that it is tied to group-wide responsibility. It doesn’t mean that we make decisions in isolation here at our Coburg headquarters and impose them on our facilities. I have employees who previously worked as materials requirement planners, in controlling, in development or human resources. As a result, many have the right background, based on practical experience, and know very precisely what their former colleagues are involved with. When specific requests come from the business side, they can discuss them on an equal footing and quickly decide whether they involve a unique, short-term phenomenon or something fundamental that will affect our processes long-term. And last but not least: centralized does not mean a geographic concentration. The decision on what location will provide what IT service for the entire Brose Group is mostly based on where the users predominantly are.
So a centralized organization is not an obstacle to delivering cost advantages from near- or offshoring?
For years, we have actually been delivering the majority of our IT services compactly at our Coburg location. That makes us agile, fast and responsive. But there is, of course, always the question of whether it pays to transfer certain clearly defined sets of functions to countries with competitive labor costs. We have already had our first good experiences with this: A team of experts in India manages our global data back-up system, for example. Our employees there do not belong to a local IT organization, but to the central information systems department. I am pursuing the distribution of other shared service centers at international locations with a great sense of proportion. The management expenditure must not end up cancelling the pricing advantage we achieve. As we now see it, Brose won’t be building any IT facilities offering group-wide services in the Asia-Pacific region beyond Pune.
Quality aspects don’t play a role?
Basically, we must allow discussion on the quality of specific IT services and their associated costs. No one at Brose thinks about saving money on the quality that constitutes and safeguards our business success. Many of our production control processes are designed according to just-in-sequence deliveries. We can only assure the operationally continuity we need through high service levels. Uncontrolled cost-cutting would endanger our ability to deliver from entire factories, and thus is certainly not an option.]
Do you turn to external service providers?
The share of the Brose’s own services is comparatively high across all processes and the value chain. That is exactly the reason that we are very careful to ensure that our costs stay at benchmark levels. We typically purchase consulting and software development services. But we will always keep the expertise we need in our own ranks. Brose trains IT experts in various specializations. That puts us in a position, for example, to take ABAP development in the SAP environment in hand very independently and turn to outside experts as reinforcement if necessary short-term.
To what extent do you roll out standard software to map out processes and functions tailored to the company?
To the extent that it is necessary to work with the best possible solution within the Brose Group. Standardization doesn’t mean that the same out-of-the-box solution operates everywhere. We have defined templates that we make available to our departments in a modular kit. It is organized based on specific categories. The appropriate building block is chosen and implemented for the facility flexibly, depending on the requirements. So we walk a tightrope between standardization and the individualization that we need. And this part is very important: Brose standards are living standards. They can be changed ”“ as the result of changing technical requirements or new technological opportunities. Everyone benefits at the bottom line from the continued development of modular solutions. The rate of reuse is enormously high. With the centralization of our system, new solutions can be delivered globally very quickly. So we get more impact.
Is cloud computing important to Brose?
Not at this point. We are currently integrating very few, select services from the Internet into our processes, for example, for our processes in customs administration. The Brose Group operates its computing center itself and I currently see no reason to change this. We naturally check regularly to see how expedient our own operations are. The total costs must be competitive and the capacity scalable when demand rises, as it did with our last acquisition. In this respect, we are following current trends very closely to see when new prospects start to emerge ”“ especially taking reliable service quality into consideration.