Case Overview
Joseph-Armand Bombardier constructed his first snowmobile by driving a ranch sleigh crosswise over snow with the engine from a Model T Ford (CBC Archives) when he was only 15 years old. From these humble beginnings, Bombardier happened to turn into a key player in the transportation business. It entered the rail transportation industry in 1974, with an agreement to create 423 subway autos for the City of Montreal.An agreement to supply New York City with 825 subway cars emulated after eight years (Canadianbusiness.com). Bombardier's willingness to differentiate led it to enter the aerospace industry in 1986 through acquisitions.
Both rail transportation and aerospace divisions contributed effectively and fairly in the revenues of Bombardier and at the end of fiscal year 2006 ending January 31st 2007, the company reported $14.8 billion net revenues. Bombardier Transportation posted revenues of $6.6 billion for fiscal year 2006; represented 45% contribution, whereas Bombardier Aerospace reported revenues of $8.2 billion for the same period, represented 55% contribution to the total revenues.
Key Problems at Bombardier
As Bombardier chose the strategy of acquisition to grow therefore, the company turned into a “‘textbook silo organization’ because Bombardier Aerospace inherited the data, processes and systems of each company it acquired. This approach created problems for the company and its management because the system did not communicate/coordinate with each other up to the desired level. Such inefficiency resulted in high costs because the company needed to keep up all the diverse frameworks. A group of challenges were reported with the operation of aerospace division included process delays, sequential activities, low inventory turns, supplier proliferation and price inconsistency, and multiple bills of material however, the most annoying problems were low visibility of inventory and lack of integration between its legacy systems. The Bombardier Manufacturing system (BMS), responsible for IT applications and had been supporting manufacturing activities at the Aerospace division was not advanced enough to adapt to the quick changes. The BMS abilities had ended up restricted.
Moreover, the company has further identified several issues that were limiting its success and growth included focus on the implementation of inappropriate business processes, dated company vision, a frail sponsorship model and inadequate participation of internal employees.
The need of Implementation of ERP system
The management of the Bombardier aerospace division realized the need of implementing an Enterprise Resource Planning System in order to understand the strategic vision of the company. To implement ERP at Bombardier Aerospace division, the project was divided into categories because it was a large project with a massive investment of many hundred millions. The purpose of implementing a new ERP system was to bring coordination between all the systems and divisions, to clear organizational vision, mission and strategies to bring a sense of unity. As there was no coordination between the systems and processes of the company and was not possible for them to continue business successfully with their out dated legacy system, the ERP system would help them in generating a single data source for the information about services and products. Exhibit 1 represents the effect of SAP and ERP on the operations, supply chain management, suppliers, customer orders and sales of the company. The new integrated system process was led by a group of senior managers from Bombardier Aerospace’s Irish facilities. The first project that was launched to understand a wider ERP strategy was Bombardier Manufacturing Information System (BMIS). The system was launched with a purpose to support Bombardier Aerospace’s operations; it would focus on the processes that support manufacturing, procurement, finance and the engineering data required to support these processes. A budget of $363 million was allocated to implement the BMIS across all the facilities. The SAP enterprise system was selected which would have interface with 63 other systems and would save $1.71 billion if successfully implemented.
SWOT Analysis of the BMIS Implementation at Mirabel plant
Strengths: The implementation of BMIS would automat the tasks that otherwise done manually such as clerical tasks. The automation of manual tasks would reduce the amount of paper used, increases analytical focus and would increase accuracy. The system will control and bring coordination between all the systems of the company to create a sense of unity. The project would save $1.71 billion if successfully implemented and would improve the efficiency of the company without compromising on production and performance. The system would change the routine of employees and would improve communication. The system was thoroughly designed by considering different levels of the company and management. The system was implemented in subsections in order to save time as well as to get an understanding of its effectiveness. The successful execution of this project would reduce inventory levels, increases liquidity, and reduces procurement overheads and cycle times. The system would eliminate job ambiguity and reduce overall acquisition and procurement costs.................
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Enterprise resource planning (ERP), the system changes to a larger scale than most other systems. They link the various components of the organization and changing its structure by deploying standardized processes and data models, which can lead to increased efficiency and significant cost savings. This case illustrates the dynamic adjustment between the ERP system and other components of the organization. The project is very large, involving investment of several hundred million dollars. The results are impressive. Bombardier introduced new processes using the system, changed the role of employees, created a different view of the organization and its activities and set new value indicators that helped crystallize the new behavior. "Hide
by Benoit Aubert Source: HEC Montreal Centre for case studies 29 pages. Publication Date: February 1, 2012. Prod. #: HEC035-PDF-ENG
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