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Chinese Managers select UK based ‘Hilf Supply Chain Solutions’ to learn the Western approach to MRP.

MRPII has a long established presence in Western countries, and has been adopted in many areas of the Far East (Singapore & Malaysia in particular). However it is still a relatively new concept for Chinese industry, in fact by 1995 only 1% of Chinese manufacturing industry (only 170 of more than 18,000 manufacturing companies*) were using MRPII.

Chinese business has recognised it is a long way behind, and has embarked upon a steep learning curve “motivated by the growing interest in MRPII implementation by Chinese manufacturing companies”

Recently a delegation of managers from China travelled to the UK for tuition in MRP concepts and fundamentals – selecting Hilf Supply Chain Solutions (based in South Wales, UK) to present the session. With the assistance of intermediary organisation Euro-Asia, who organised hotels, driver, interpreter etc, following visa applications, the group travelled from Beijing to South Wales.

Lindsay Harding (Director of Hilf Supply Chain Solutions), who presented the session commented on what an appetite for learning the group displayed, “With the beauty of hindsight now on our side, training in this topic benefits from solid examples, anecdotes and perceptions of where things went slightly astray over here, losing focus as new initiatives came into vogue, and making some incorrect decisions when, and when not to use MRP”.

The group, senior managers from Easyhome, a major Chinese DIY chain, were presented with case study examples of manufacturers supplying into Distribution Centres prior to replenishment messages from UK NDCs prior to store delivery. Lindsay went on to say, “The IT infrastructure in position with our major UK DIY stores is immense, complicated and expensive, encompassing RFID, EPOS data, Collaborate Planning Forecasting & Replenishment with suppliers, inventory and warehouse management systems etc backed up by corporate ERP systems. The Chinese realise that without the MRPII building block in position they cannot move themselves further along this road, however, being a low cost market, the majority of local companies will likely not have the financial resources to invest in ERP systems familiar to the west (SAP, Oracle, Baan etc). I believe there is a massive potential market over there for companies offering lower priced solutions. To put that market into perspective, the population of Shanghai alone was around 17 million in 2003, but recent estimates which include immigrants place it nearer 18 to 20 million people – and as Steve Gilman of B&Q points out, that’s about 40 % of the population of the UK !”.

Any suppliers will have some major implementation issues to overcome following language translation of the software, beyond the expected cultural issues. In the UK back in the eighties when MRPII implementations were common, to save consultancy fees, companies would ‘poach’ key employees from other businesses where they had been members of successful implementation teams, such individuals tend to be more scarce in China. There are a number of western MRPII suppliers who recognised the market potential early and have made good progress, with the major players including System Software Associates (SSA) and Fourth Shift.

Global companies with corporate ERP systems already in position have a huge advantage in these terms, replicating a proven roll out methodology. For example the recent delegates undergoing the Hilf training were very aware of the increasing competition from B&Q. With an IT backbone supported by SAP, B&Q has undertaken a rapid entry into the Chinese market, with new stores opening regularly (with plans for approx 70 stores by 2008).

MRPII is still unfamiliar and baffling to most Chinese manufacturing companies, with few firms managing to implement effectively. What is encouraging, is that they have recognized, (based on research conducted jointly between Concordia University and Chinese academics*) is that two of the major criteria for success are ‘Support from senior management’ and ‘Training Managers in MRPII concepts’ .

Refer also to website

  • Source :- “A MRPII Survey Study of the Chinese Manufacturing Industry” by Zhongzhi He , Mohamed Khalifa , Martin Kusy and Tiesheng Zhao