12/21/2015copyright © 2011 stefan henningsson.1 trelleborg & kléber: a rubber hose love story...

04/21/23 Copyright © 2011 Stefan Henningsson . 1

Trelleborg & Kléber: A rubber hose love story

March 21, 2013

Copyright © 2009 Robert D. Austin 2

Once upon a time…

• Trelleborg, Sweden, 1995:

• “Trelleborg was at this time restructuring around its core businesses. It was not

obvious that hose should be a part of the focus. Trelleborg’s hose business was

not very exciting... limited in scope and not profitable. Therefore, it was

questionable whether it should be part of the core… ... on the other hand, it was

obvious that the hose-market was fragmented and relatively unstable. ... …

Therefore, it was an attractive growth option with the right acquisition.”


Once upon a time…

• Clermont-Ferrand, France, 1995:

• “Kléber was ill. Very ill.”

• “Kléber had strong market shares in some key countries. … … Kléber was not

profitable due to lack of management support and investment. Michelin did not

realize the potential of Kléber’s market position.”

• “Major investments were needed. … ... Optimization decisions had not been

taken, since Michelin could not take optimization decision.”


The marriage

• Trelleborg decided to buy Kléber from the Michelin group, and expand its hose business.

• In one stroke the hose related business increase from 150 to 800 employees.

• The increased size should be utilized in a scale-based, low-cost strategy.

• “In terms of production, the two units… ... were very compatible… …

Overlapping was also limited in geographical terms. Trelleborg was more Nordic,

more niche. Kléber was more Latin, had a larger product range, and had a wider

distribution network. Basically, the companies only competed in the same niche

in Germany.”


The “honeymoon”

• In order to leverage scale advantage, IT integration of production, logistics, sales, purchase, and finance systems was essential.

• A complex IT infrastructure faced the turnaround management:• Each country had its own company, its own stock and its own

ERP-system.• Bergounix: in-house development• Movex: of the shelf package

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• 1996 integration strategy: Replace the Bergounix installations with Movex installations.

• Consensus-based specifications.• Then link all movex installation to have full visibility, access each

others stock, share production capacity, same pricing, etc. • Good idea?


The “honeymoon”

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The “honeymoon”

• The problem:• Cost, cost, cost. • Complexity, complexity, complexity. • Year 2000. • Everyone wanted exactly what they already had.

• What to do?


Integration

• The 1999 (French) strategy: simplification and unity. • “In 1999 we started the ‘Unity’ project. We made this pamphlet in Swedish, English,

and French… and we sent it to every employee. …The idea was not to link everything together, and put an e-business layer on top of the existing systems. The intent was just to simplify everything and to have full visibility of the business. In the existing setup, it was very difficult to know what was happening across the organization… with 11 companies… and 7 ERP systems… the same products had different prices in the different warehouses and … So, when we talked to the German manager, he could say that his business was good, calculated on the local margins… but when we recalculated his performance applying TIH wide standard margins, his was a bad business in which we lost money.”


Integration

• “The country-based Bergounix installations were retired and all business units

were moved onto the Bergounix system used in Clermont-Ferrand. By 2001 all

countries covered by the former Kléber unit were supported by the central

Bergounix system.”

• “We could then close down all national companies,

eliminate all local stock, and have only invoice

company in the old Kléber parameter. Without any

new IT at all. Not a single line of code!”

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Integration

• However, the 10 years old Bergounix system was causing TIH problems. In addition, the original TES based hose business was still supported by individual Movex systems in each country.

• “In 2001 we had real problems with the infrastructure and IT. The Bergounix system

was 10 years old. It was hard to support and

didn’t fit with all other things that evolved in IT. If we

tried to add modules it was complex and expensive…

… and it was a mess. … Here in Palport we had

to do something… since the system was built in-house

we had no possibility to add an e-business module or

a supply-chain module to optimize and so on. So at that

time we said we had to replace the Bergounix system.“

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Copyright © 2009 Robert D. Austin

Integration

• Selecting Movex:

• “We decided to buy a prestudy, comparing Movex to the other standard

packages available. The study compared the functionality of. SAP, Oracle, JD

Edwards… The idea was to check if Movex was competitive with the others. I

had also had experience with another package, which I had implemented

elsewhere, and wanted to know how Movex compared with it. … … The ERP

system itself was not what was interesting for us, that was the basics. It should

just support our business at a low cost. What we were interested in was for

example the supply-chain module that we are implementing right now. But that

we couldn’t have done without putting the whole business unit into the same

Movex application.“


Outcome

• Benefits:

• New organizational structure, Cost, Visibility, New IT options, Drawing on group

competences, Growth potential.

• “Since 1999 we have improved every year. In 1999, three years after the

acquisition, we lost €3 million. The ROA [Return On Assets] was negative, while

for the Trelleborg Group the standard was 15%. We have improved every year

since then and last year we had a ROA of 17%. The profit was more than €7

million. Turnover was €100 million. It’s a good improvement, and a good result. It

is easier now to continue the improvements when you can show that you are

going in the right direction. This year [2006] the ROA will increase to 21 or 22 %”


Outcome

• Just by using a of the shelf package:

• “We decided no specific development was going to be. It was a decision in the

beginning. We have done only 4 specific developments that in all took some 80

days for consultants to develop.”

• Can’t someone just steal it?


Outcome

• Are you not afraid that your competitors will implement the same system?

• No competitors have deployed Movex. One company, not really a competitor but

also in this kind of business have deployed the financial and book keeping parts

of Movex but not the rest.

• You are not worried that someone else will copy your strategy?

• No… No. We are convinced that we have a lot of advantages here, and I can

imagine that a competitor would see them as well… but the companies in our

business are very different… you can’t compare two of the, all have their specific

characteristics, problems and opportunities…


Conclusions

• Cost of IT and Value of IT

• Standardization and innovation

• Knowing what IT you want, what match your organization

• Project management, runaway projects

• Vendor partnering

• Talent management

• Emerging technologies

• Risk and complexity

• Communication

• You are not worried that someone else will copy your strategy?

• No… No. We are convinced that we have a lot of advantages here, and I can imagine that a competitor would see them

as well… but the companies in our business are very different… you can’t compare two of the, all have their specific

characteristics, problems and opportunities…

Your task

• Identify and characterize 2-3 important IT strategy challenges that TIH faced in the transition.

• Describe how the tools and methods covered in the course attend to the challenges and what are the shortcomings of the means.

• Argue the most important IT strategy challenge that TIH currently are facing when the case ends, how the material in the course attends to this challenges and the limitations of the material covered in the course to attend to this challenge.

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Your task

• With ‘course material’ we refer to concepts, theories, models, methods, processes, and examples in the course book, the HBR cases, and the other readings in the course curriculum.

• Whenever the course material us used, used some sort of reference. The format/type of reference its not important, but the use of some sort of indication where course material is used, is.

• If in any doubt how to write the case analysis and what material to cover, refer to the course’ learning objectives which will be used for grading the assignment.

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12/21/2015copyright © 2011 stefan henningsson.1 trelleborg & kléber: a rubber hose love story...

Documents

austin copyright

trelleborg klber

trelleborgs hose business

hose related business

integration strategy

integration of production

french strategy

terms of production