System of U.S. Steel - Case Study Example

CASE STUDY Can Information System save U.S. Steel Background Market, Competitive position and Strategies IS strategy and Implementation Results and Business benefits Conclusion Reference list CASE STUDY 1 Can Information System save U.S. Steel Background U.S. Steel (USS) is the third largest integrated steel producer in the world with an annual production rate of 27 million tons. In 1996, Ford Motor Company threatened to sever all business with U.S. steel primarily because of their inefficient delivery system, rendering Ford incapable of achieving economies of scale. This threat was a wake up call for USS to revamp their production system and achieve "continuous flow manufacturing" or they will lose out to other competitors such as Arcelor or POSCO (U.S. Steel, Arcelor Mittal CEOs see steel growth, 2007). Market, Competitive position and Strategies USS identified that in order to get back to profitability it needed to increase its market share which required lowered production costs and centralized management of its business and factories. USS's major problems were evident in its order taking process. The orders were manual, imprecise and filled with errors; there was no coherence among the different processors as they had their own tracking and order system. There fore USS was unable to follow each order as it was processed and delivered. The communication system employed between the different processors was a dialup system meaning that data processing wasted a lot of time, invariably forcing the company to hold large inventory, increasing its production cost. All such problems made USS uncompetitive in face of other producers such as POSCO, which was recently setup with the latest technologies. IS strategy and Implementation To fix these problems USS took rapid steps to improve their production system. First of all, they provided their customers to place theirs order online specifying the product, quantity, price, composition, size, thickness, and even delivery date for their orders. The software was developed so as to allow the customer to be able to see the cost as well as the delivery dates of their order, to allow them to plan accordingly for their business. It also allowed for messages from different processors to be translated much more quickly and more efficiently. USS also connected DecisionExpress software from LiveCapital for customers which reduced its uncollectible debts. To further improve the accuracy of the order USS incorporated several other soft wares such as order fulfillment and later i2 Technologies. They also introduced soft wares such as iTrac to keep track of their shipments and Mechanical Item Generation System to regenerate orders for repeat customers. USS also setup a subsidiary USS Engineers and Consultants, to sell these soft wares to assist other companies. To maintain its competitive advantage they only provide soft wares which are a version older than their current software (Bratislava, 2003). Results and Business benefits In 1996, when USS faced a disastrous situation of losing Ford Motor, USS identified that, in face of future competition computerization of the production system was a necessity. This direction allowed USS to be more efficient and more profitable. After the implementation of the software system USS required 3 work hours to produce a ton of steel, as compared to 4 hours in Germany and 4.8 hours in POSCO. Hence, USS was able to greatly benefit from strong economic conditions by supplying steel to United States, China and other countries (Michael Erman - 2007). Conclusion The progress of U.S. Steel depends on the world demand for their products i.e. steel. As witness from the world wide economic shock, demand for steel and other essential construction material has plummet. Widespread closer of factories has significantly halted further investments, resulting in drastic drops of steel prices. USS has invested great sum of financial capital in refining their production cycle but in current times it will be very difficult to gain substantial profit margins. USS will have to increase their supply channels to more countries in order to sustain their current sales return. This will require further investments and costs in this current scenario but will return great dividends once the economic situation is rectified. Reference list Bratislava. (2003, October 16). U.S. Steel Kosice Wins Secretary's Award for Corporate Excellence. Retrieved April 15, 2009, from http://slovakia.usembassy.gov/pr031016.html U.S. Steel, Arcelor Mittal CEOs see steel growth. (2007, July 12). Retrieved April 14, 2009, from Thomson Reuters: http://www.reuters.com/article/businessNews/idUSN1233772220070712 CASE STUDY 2 - How Much Can the Internet Help GM Background Market, Competitive position and Strategies IS strategy and Implementation Results and Business benefits Conclusion Reference list CASE STUDY 2 How Much Can the Internet Help GM Background General Motors is the largest automaker in the world. GM was restructured by CEO Alfred Sloan, who divided it into five operating groups, semiautonomous with their own marketing strategies. GM's auto sales have been drastically declining since 1970 and currently they only cater to 28% of the U.S. vehicle market. Market, Competitive position and Strategies The model of top down control and decentralized execution was very effective for GM but overtime they have lost their competitive advantage because their competitors were able to outsource and attain production at lower costs, where as GM was not able to adopt as quickly due to its huge size, lumbering bureaucracy, inefficient production process and out dated communication soft wares. GM lost its market share and required strong strategies to dismantle the bureaucratic inflexibly and find measures to lower its cost and gain its lost competitive advantage. So on February 2000, when Rick Wagoner was appointed as the new CEO of GM, focus was directed towards the development of a separate e-Business department, which would open new sources of business for GM. The emphasis on using technological innovation was also stressed to help improve the production process, improve quality, lower costs and provide greater features to attract a wide range of customers. IS strategy and Implementation The integration of internet into GM was carried out to improve the internal production mechanism. Through a collaborative engineering system allowing for GM employees to share design information, an Electronic Data Systems Corp. (EDS) called Team center Engineer7 was attained, enabling sharing of 3D designs and keeping track of parts and subassemblies (GM acquires Electronic Data Systems Corporation | General Motors ..., 2009). An internal portal was set up known as Socrates to allow GM employees to access GM's internal sites. Incorporation of such soft wares and services was carried out to allow easy sharing of information so as to help the GM employees from all over the world to communicate easily, which is very essential for an efficient production system. GM also formulated an eGM department, designed to cater services online. GM was able to provide services such a selling Vehicles Online, Building Vehicles to Order and in car Online Services to their customers. Such features will allow GM to not only get a greater market share but also help streamline production, lower inventory size and gain a comparative advantage by providing greater services to the customers. Results and Business benefits Strenuous efforts to restructure and break the bureaucratic style of GM have directly resulted in GM jumping to 3rd in quality ranking. GM has been able to provide latest features with new designs to the customers while it has also become very efficient in selling their automobiles over the internet. Incorporating Internet has highly improved GM's efficiency in production but GM still has not been able to achieve large profit margins due to high fixed cost of pension plans and health benefits to the retired employees. Future increase in profits largely depends on GM cutting its cost because the use of internet and new technologies has allowed GM to achieve efficient production capabilities (GM, Chrysler Could Be Frozen Out of Fuel-Efficient Technology Loan Program, 2009). Conclusion GM has had to turn to the government for a bail out plan. Increasing oil prices has resulted in major drop in demand for GM vehicles. One of the main reasons identified for this has been the high fuel consumption vehicles of GM which an average American individual cannot afford for daily use (Greg Johnson - 2009). GM has to reinvent its image in front of the American public to gain their trust. It has to enforce difficult policies to ensure this kind of situation can be avoided in the future; this means that it will have to reduce its cost and rectify the issue of pension plan of the retired employees. GM is still amongst the largest automobile companies of the world but it faces difficult times before it can return to high gains and profits margins. Reference list GM acquires Electronic Data Systems Corporation | General Motors ... (2009). Retrieved April 14, 2009, from www.xtimeline.com/timeline/General-Motors/GM-acquires-Electronic-Data-Systems-Corporation GM, Chrysler Could Be Frozen Out of Fuel-Efficient Technology Loan Program. (2009, April 7). Retrieved April 13, 2009, from http://blogs.edmunds.com/greencaradvisor/2009/04/gm-chrysler-could-be-frozen-out-of-fuel-efficient-technology-loan-program.html Read More