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ESPOO-VANTAA INSTITUTE OF TECHNOLOGY
MERCURIA BUSINESS SCHOOL
DEGREE PROGRAMME IN ECONOMICS AND BUSINESS ADMINISTRATION
COMPETENCE BUILDING OF A GLOBAL LOGISTICS APPLICATION Case study on SAP R/3 Training Approach at Nokia
Mia Harju
International Business
Dissertation
November 1999
PREFACE
The subject of this study originated from my personal interest in logistics,
information management and training gained through experiences working
for Nokia since 1998.
To carry out this study I received many useful guidelines from several
counterparts. In addition to guidelines from topic-related literature, I received
valuable tutoring from my thesis adviser Helena Mansio, managing professor
at the international business department of Mercuria Business School,
Vantaa, Finland.
At Nokia I received input from several persons within Nokia Information
Management organisation. To mention some of them, I'd like to especially
thank Risto Tanner, Jorma Hietala and Harri Hyvönen for their input. A
special thanks also to my colleague, Victoria Sanders, a native English
speaker, who kindly helped me with the language check. I am also very
grateful for the contribution of all other persons who have given their input to
the final outcome of the study.
2
Espoon-Vantaan teknillinen ammattikorkeakoulu
Koulutusohjelma: Talous- ja hallinto
Suuntautumisvaihtoehto: Kansainvälinen kauppa
Tekijä: Mia Harju
Opinnäytetyön nimi: Tietojärjestelmän koulutus globaalissa yrityksessä –
tutkimuskohteena SAP R/3 koulutuskonsepti Nokialla.
Vuosi: 1999 Sivumäärä: 67
Tiivistelmä:
Globaaleissa yrityksissä tehokas logistiikkaketjun hallinta on yksi tulevan
vuosituhannen tärkeimmistä kilpailukeinoista. Tiedon hallinta ja toimivat
tietosysteemit ovat avainasemassa tässä kehityksessä. SAP R/3 on yritysten
tietojärjestelmien maailmanlaajuinen markkinajohtaja, sisältäen logistiikan,
henkilöstöhallinnon sekä taloushallinnon toiminnot. Tämän takia myös Nokia
on valinnut juuri tämän systeemin pääasialliseksi tietojärjestelmäkseen.
Jotta yritys pysyy ajan tasalla sen eri yksiköissä tapahtuvasta
liiketoiminnasta, tulee henkilökunnan koulutukseen panostaa huomattavasti.
Tämä työ käsittelee SAP R/3 systeemin logistiikkatoimintojen kouluttamista
Nokialla. Työn pääpaino on koulutuskonseptin esittelyssä sekä logistiikan
yleisten teorioiden läpi käymisessä.
Tutkimuksen alussa pohditaan Nokian tämänhetkistä tilannetta sekä
logistikan kehitystä yleisesti. Työn pääpaino on kuitenkin yrityksen sisäisten
SAP R/3 kouluttajien kouluttamiseen laaditun konseptin esittely ja
puntarointi. Tutkimustuloksena on Nokialle räätälöity koulutussuunnitelma
SAP R/3 asiantuntijaorganisaation hyödynnettäväksi käytännössä.
3
Avainsanat: Koulutus, tietohallinto, SAP R/3, logistiikka, kansainvälisyys.
Espoo-Vantaa Institute of TechnologyDegree Programme in Economics and Business Administration
International business
Author: Mia Harju
Mentor: Helena Mansio
Title of thesis: Competence Building of a Global Logistics Application - Case study on SAP R/3 Training Approach at Nokia
Year: 1999 Number of pages: 67
Abstract:
In global companies efficient management of logistics chains will be one of
the major competitive advantages of next millenium. Information
management and accurate information systems are key elements in this
development. SAP R/3 is the current market leader in global information
systems, including the functions of logistics, human ressources and finance &
control. This is why also Nokia has chosen SAP R/3 as its major information
system.
In order to keep track of the simoultaneous activities of a company, one
needs to put special emphasis on the training of staff. This study describes
training activities of SAP R/3 system, focusing on logistics. After an overview
on Nokias current situation globally, the emphasis of the study is turned to
presenting the complex environment of logistics and related theories. The
ulitimate goal of this thesis is to offer a pragmatic SAP R/3 training plan to be
utilised at Nokia in competence building of information system specialists.
The method used in the study is a pragmatic case study approach where
both specialist views as well as written sources have been used. The main
result of the study is a training plan to be used in practice at Nokia.
4
Key words: Training, information management, SAP R/3, logistics, globality.
TABLE OF CONTENTS
PREFACE.....................................................................................................................................2
SUMMARY IN FINNISH............................................................................................................3
ABSTRACT...............................................................................................................................4
1 INTRODUCTION...................................................................................................................7
1.1 Topic............................................................................................................................... 7
1.2 Purpose of the Study.......................................................................................................8
1.3 Definition of main terms used in the study......................................................................8
1.4 Methodology..................................................................................................................10
2 NOKIA SPECIFIC BUSINESS BACKGROUND INFORMATION.......................................16
2.1 Introduction to Nokia Group..........................................................................................16
2.2 Introduction to Nokia Networks (NET)...........................................................................16
2.3 Introduction to Nokia Mobile Phones (NMP).................................................................17
2.4 Nokia Communications Products (NCP).......................................................................17
3 BACKGROUND INFORMATION ON GLOBAL LOGISTICS.............................................19
3.1 Challenges set by global enviroment............................................................................19
3.2 Role of Demand/Supply Chain Management in Logistics.............................................21
3.3 The Logistics Mix..........................................................................................................22
3.4 Globalisation – the major challenge in the branch of logistics.......................................23
3.5 Redefining the supply chain..........................................................................................24
3.6 Main logistics trends at the end of 20th century.............................................................26
3.7 Going beyond traditional data exchange – main ideas of EDI and ERC.......................27
3.8 Moving towards a "pull" demand chain.........................................................................28
3.9 Future of globalisation of logistics.................................................................................30
4 NOKIA SPECIFIC CONCEPT OF GLOBAL LOGISTICS..................................................32
5
4.1 Main players in Nokia global logistics............................................................................32
4.2 Nokia Demand/Supply Chain........................................................................................33
4.3 Nokia IM Global Support Concept.................................................................................35
5 SAP R/3 RELATED TRAINING AT NOKIA........................................................................39
5.1 Introduction to SAP R/3.................................................................................................39
5.2 SAP R/3 System Application components....................................................................41
5.3 Competence Building at Nokia......................................................................................42
5.4 Competence Building of SAP R/3.................................................................................44
5.5 Training Approach.........................................................................................................46
5.6 Moving from general knowledge level into specialisation..............................................49
5.7 The structure and content of SAP R/3 trainings............................................................50
5.8 Role of SAP R/3 specific training..................................................................................52
5.9 Summary of the delivery of the training.........................................................................56
6 CONCLUSION....................................................................................................................61
6.1 Objectives of the study...................................................................................................61
6.2 Main results of the study................................................................................................61
6.3 Reliability and validity.....................................................................................................62
6.4 Evaluation on progress of own work..............................................................................62
6.5 How the topic could be developed further in other studies.............................................63
REFERENCES........................................................................................................................63
GLOSSARY OF TERMS.........................................................................................................66
6
1 INTRODUCTION
1.1 Topic
Logistics is one of the main functions of a company, binding together the
efforts made in product development, sales and marketing and production
departments. The information produced by logistics is used as the basis for
a company’s financial and control management. Most strategic
decisions are therefore made based on data originating from the logistical
chain. The "heart" of a company, the actual goods from a customers point-
of-view, are delivered via the logistics chain.
Here are just a few arguments to underline the importance of logistics. At the
gate of the 21st century when effective flow of information has become one of
the most important competitive advantages in global markets, the role of
logistics is crucial and importance of fluent logistics cannot be too strongly
stressed.
This study aims to analyse the fast growing telecommunications business
from a logistics point-of-view. Special emphasis has been placed on the way
business data is handled in a global telecommunications company; the SAP
R/3 data system is used as an example to demonstrate how global data can
be efficiently managed. The special focus of the study and the structure in
which it will proceed will be presented in the next chapter.
After studying these main points, the study gives a brief insight into how to
ensure continuous competence building within Nokia and how to include
these actions in possible future development of IT speciality fields. Finally, a
contemplation on the way the thesis has been carried out will be presented.
The ultimate goal of this study is to clarify the different views on logistics at
present, not forgetting the human aspect of learning in the rapidly developing
7
information society. The next chapter will give an overview of Nokia’s
organisation and the field of logistics in order to have the necessary
background information to understand the SAP R/3 related training needs.
1.2 Purpose of the study
The study type of this work is a development project, concentrating on
training development at Nokia. The final outcome of the study should help
the teams working for SAP R/3 competence building at Nokia to plan and
deliver the necessary trainings more efficiently.
Besides acting as a development project, focusing on one particular
company gives the work a frame of a case study. This is why theoretical
background information has also been thoroughly used. A deeper definition
of case study is given in chapter 1.4.1.
1.3 Definition of main terms used in the study
1.3.1 Definition of logistics
The Oxford Word Business Dictionary (1993) defines logistics as "Control of
the movement of materials in a factory, from the arrival of raw materials to
the packaging of the product, known as materials management, together
with distribution management (or marketing logistics), which includes the
storage of goods and their distribution to distributors and consumers."
At Nokia, besides the physical transportation of goods, logistics includes
also the transportation of related data, where from the importance of a
complete database to administer the various needs of information flows.
1.3.2 Organisation: Nokia IM–Demand/Supply Chain Applications
Nokia IM stands for Nokia Information Management and is the owner of the
implementation of the SAP R/3 system at Nokia from a technical point-of-
view. Demand/Supply Chain Applications is the organisation within Nokia IM
driving the creation, deployment (i.e. implementation) and support of SAP
8
R/3 logistics modules within Nokia globally. The abbreviation DCA is used
for Demand/Supply Chain Applications in this study. A more profound picture
on Nokia IM and DCA is given further in the study.
1.3.3 Application: SAP R/3 system from logistics view-point
The word SAP originates from the German and stands for ‘Systemanalyse
und Programmentwicklung‘. Nowadays, the commonly used translation in
English is ‘Systems, Applications and Products in data processing’. SAP is
also the name of the German company SAP AG being the global owner of
SAP R/3 licenses. R/3 stands for Release 3, being the name of the software
product itself.
The focus of this study is on the logistics parts of the SAP R/3 system:
Production Planning (PP), Material Management (MM) and Sales and
Distribution (SD) modules. The content of these modules will be presented in
more detail in the following chapters. Since the focus of this study is
logistics, Human Resources (HR) and Finance (FI) and Control (CO)
modules have been left out of the scope. This study only handles the way
that logistics data is processed in the SAP R/3 application and therefore
comparisons with other globally known logistics systems such as Baan or
Oracle based tools have been left out of the scope of this study.
1.3.4 Competence Building principles and Training approach
The training approach and principles of competence building in general only
refer to the Nokia IM organisation. Within this Nokia internal IT (Information
Technology) service provider, the study concentrates on Demand/Supply
Chain Applications. There are several learning and training theories used
within Nokia and some of these have been used as benchmarking
examples. The main focus is nevertheless on the training needs of the DCA
organisation and presenting the training approach that has been created by
the DCA Training Team to respond to these needs. The main topic, on
which the end of the study concentrates on, is the usage of company internal
trainers versus the usage of external specialists in training. The benefits and
9
disadvantages of own staff as trainers is considered from financial,
organisational and learning view-points.
These were the definitions of the main concepts of the study. A more
comprehensive Glossary of terms is included in the end of the study to give
an explanation of the terms which were not presented here. Most of these
terms are general economics or IT terms, and have therefore not been
separately explained here.
1.4 Methodology
1.4.1 Definition of case study methodology
What is a case study and which factors differentiate it from other forms of
research? What benefits can it bring compared to other types of study?
According to Mr. Robert K.Yin (1994,20) the two core features for defining a
case study are a) the scope of the study and b) the analysis of the used
data.
In his book, Case Study Research – Design and Methods Yin (1994, 21)
points out that a case study is an empirical inquiry that:
- Investigates a contemporary phenomenon within its real-life context,
especially when
- the boundaries between phenomenon and context are not clearly evident.
This part of the definition refers to the scope of the study. To be accurate,
the scope of a case study needs to correspond to a real situation, where the
scientific definitions of things do not necessarily exits. In a way, the case
study aims to organise the phenomena that are studied, trying to find new
solutions that could be implemented in similar kinds of situations later. This
pragmatic way of seeing things differentiates case study methodology from
other research types.
Althought the used data sources of this study will be presented more in
detail in paragraph 1.4.3, a few words on used data should be mentioned to
10
justify the chosen methodology. Since the topic concentrates on a real
business project, envolving a certain group of Nokia staff, the best specialist
domain of this topic have been used. These include books written on the
topic, external specialist from Andersen Consulting and Nokia internal
experiences. Nokia internal experiences are based on Demand/Supply
Chain Applications training team notes, such as meeting memos and e-
mails. Chapter 1.4.3. will enlight the usage of these data sources more in
detail.
Although the usage of case studies is argued by some specialists to be not
seen as "real research", its usefulness e.g. in the field of business is
evident. Case studies which can be used in business planning work as
benchmarking examples have brought considerable advantages to many
companies. Their usage has even created new fields of businesses, for
example consulting firms (e.g. Gartner Group) concentrating on case study
research on various topics.
1.4.2 Objectives of the study
The main objectives of this study are to:
I) Study the specific training needs of a certain target group, which in
this case is the staff of Nokia IM/ DCA organisation. This also includes
studying the environment (i.e. logistics and information management)
of this organisation, presented in chapters 2, 3 and 4 .
II) Organise these needs into a stucturised training plan. (Presented in
chapter 5).
III) Plan more specific training content on a more detailed level.
(Presented in chapter 5).
IV) Present pragmatic ideas on the implementation of phase of the
training. (E.g. change manangement issus in training delivery,
preseted in chapter 5.9)
11
The emphasis of the study is on phases I and II, in order to have a
consistent training plan as a final result of this study.
1.4.3 Analysis of used data and sources
The second criteria Yin points out in his book, is the analysis of data sources
used for a case study. According to his definition "The case study inquiry:
Copes with the technically distinctive situation in which there will be many
more variables of interest than data points, and as one result
relies on multiple sources of evidence, with data needing to converge in a
triangulation fashion, and as another result
benefits from the prior development of theoretical propositions to guide
data collection and analysis.
Since case studies tackle themes that have often not been profoundly
studied earlier, it is natural that the related data sources are to be vague and
sometimes even contradictory. This is one of the characteristics of a case
study. In order to gain the maximum benefit from a case study, one needs to
gather the important elements of various data sources and combine this
information with existing or invented new theories. To be able to clearly
specify and analyse the used data sources is a basis for a good case study.
These are the definitions on which this particular case study has been built
and should be measured against.
The information sources used can be categorised based on the following
views:
From a theoretical point of view: Books from the Helsinki School of
Economics library have been one of the main sources of information (see
information sources at the end of the study). Up-to-date collections of
international management, economics literature and global studies on
logistics from this library offered a sound basis for theoretical analysis.
12
From a practical point of view: Approximately two years of work experience
within Nokia has been very profitable. The international and innovative
working environment has given a very good insight into the concepts
described above, applied to an international and fast-growing company.
Based on Nokia internal support: Mentoring and support from Nokia
professionals in the area of Information Management and logistics have
enabled a better understanding of the business at Nokia. Also the company
information sources, e.g. intranet material, have added value to the final
outcome of the study. (Note: No confidential Nokia intranet material has
been used.)
Since Andersen Consulting is one of the major expert domains used by
Nokia IM Demand/Supply Chain Applications organisation, their contribution
as data source is evident. The training planning has been done in co-
operation with Nokia employees and these external consultants. Their
specialisation field has been especially SAP R/3, which has a slightly
different format from other major ERP (Enterprise Resource Planning)
systems, such as Baan, Oracle or Peoplesoft (Mäkelä, 1999, 74-78). This is
why Andersen Consulting also needs to be mentioned as one source of data
of this study.
1.4.4 Evaluation of the reliability and validity of the study
According to Yin (1994, 33) reliability demonstrates that the operations of a
study – such as the data collection procedures can be repeated with the
same results. This reflcts to the fact that information sources need to clearly
stated and analysed. What is the level of realibility of this study then ?
The study is not based on a survey or series of interviews, but on ideas and
findings based on the actual business environment. Input from internal co-
workers and from external consultants (eg. Andersen Consulting) has
strongly contributed to the final outcome of this study. Authors professional
experiences at Nokia have consisted of work as a Trainer of a global
logistics application after which the role was changed into undertaking the
13
tasks of Training Team Leader at Nokia Information Management
organisations subdivision, Demand/Supply Chain Applications (DCA). DCA
is the main owner of the creation, deployment and support of logistics
applications at Nokia. It is a highly international specialist organisation, both
considering the Nokia internal services it offers as well as the staff that work
there. Due to the pragmatic and Nokia specific scope of the study, these
factors and expertise domains enhance the level of reliability.
Yin (1994, 33) divedes validity into three main categories: construct validity,
internal validity and external validity. As in most pragmatic case studies, the
construct validity is used as criteria in this study. Yin defines construct
validity as establishing correct operational measures for the concepts being
studied. The content and accuracy of the training plan presented in this
study will be tested in a training pilot project (15.Nov.1999-15.Jan.2000) at
Nokia. The objective of this pilot is to measure the accuracy of the planned
training concept, based on the written feedback gotten from the participants.
The participants will also try to pass the SAP R/3 certification, acting as a
knowledge level test. This pilot can be seen as the main constructed validity
measure on the topic.
Besides establishing correct operational measures for the concept being
studied, Yin (1994, 33) points out that construct validity measurement should
include the following case study tactics: using multiple sources of evidence,
establishing chain of evidence and have informants review draft case study
report. In this case the used sources of evidence are; litterature written on
the topic (for details see used sources in the end of the study), specialist, i.e.
Andersen Consulting representants opinions and experienced Nokia
managers who have reviewe the topic. The chain of evidence has been
based on both Nokia staff as well Andersen Consulting earlier experiences
of training approaches, based on a pragmatic approach of best practices
and leassons learned from previous projects.
One of the main challenges of carrying out a case study on information
technology related training consists of coping with a technical and fast-
changing environment. The fact that Nokia is one of the fastest growing
companies in the world implies constant evolution in all business areas,
14
logistics being an important part of it. This is why it can be stated that the
study is as reliable as it can be at the present moment. This naturally implies
that all information presented here can only be valid as long as the concepts
and applications used in this study exist. Due to the fast developing nature of
IT-technologies in general, a general reliability and validity time period of
approximately two years can be given as an absolute maximum. After this it
can be estimated that the information presented in this study will be at least
partially outdated, and could therefore not be considered reliable.
We have now in the first chapter of the study defined the scope of the study,
limiting this otherwise intangible subject. The rest of the study will tackle the
actual topic, on how to efficiently implement and train a complex logistics
application in a global company.
15
2 NOKIA SPECIFIC BUSINESS BACKGROUND INFORMATION
2.1 Introduction to Nokia Group
Headquartered in Finland, Nokia is a broad-scope telecommunications
company supplying mobile phones, mobile and fixed telecommunications
networks, data communications solutions, multimedia terminals and
computer monitors. Nokia is the leading mobile phone supplier and a leading
supplier of mobile, fixed and IP (Internet Protocol) networks, including the
related services. With sales in 130 countries, net sales totalled EUR 13.3
billion in 1998. Nokia employs more than 51,000 people world-wide. Nokia
shares are listed in the New York, Helsinki, London, Stockholm, Frankfurt
and Paris stock exchanges.
Nokia comprises three main business groups: Nokia Networks (NET), Nokia
Mobile Phones (NMP) and Nokia Communications Products (NCP). In
addition, Nokia includes a separate Nokia Ventures Organization (NVO) and
the corporate research unit, Nokia Research Center (NRC), which will not be
presented here.
The internal organisation within Nokia responsible for the IT (Information
Technology) systems of all parts of the Nokia group is Nokia Information
Management. To understand the needs facing the Nokia global IT system
better, a brief overview of the main Nokia units (NTC and NMP) will be given
next.
2.2 Introduction to Nokia Networks (NET)
Nokia Networks (NET) develops and manufactures infrastructure equipment
and systems for mobile and fixed networks. Since December 1997 Nokia is
16
the world's largest supplier of GSM networks and a market leader in mobile
data infrastructure. In addition, it is a significant supplier of advanced
transmission and switching solutions.
Nokia Networks is also a leading supplier of voice and data system solutions
for both wireless and wireline operators. Nokia offers fixed and mobile
switching systems, access solutions, network management and IP (Internet
Protocol) networking, as well as Intelligent Network (IN) solutions for both
mobile and fixed networks. The global Customer Services network makes
Nokia a full service house. Until September 1999 Nokia Networks was called
Nokia Telecommunications. The name was changed to better reflect the new
range of products of Nokia Networks.
2.3 Introduction to Nokia Mobile Phones (NMP)
Nokia is the world's largest manufacturer of mobile phones. Nokia develops
sophisticated mobile phones and accessories for all major digital (GSM,
AMPS, CDMA, TDMA) standards. All features of Nokia mobile phones have
been developed to make communicating easier for people in every-day
situations, corresponding to individual needs of different cultures and user
groups. During 1998 the net sales of Nokia Mobile Phones grew by 51%,
resulting in 13 326 million Euros. 58% of net sales come from the Europe
area, 21% from the Americas and 21% from the Asia Pacifica area. A large
growth in personnel was seen in 1998, during which NMP staff grew by 9819
persons.
2.4 Nokia Communications Products (NCP)
NCP business group consists of three main product branches, presented
next. Nokia Multimedia Terminals is a leading supplier of satellite and
other terminals designed for reception of digital broadcasting and multimedia
applications. Nokia Multimedia Terminals collaborates closely with
programme and content providers world-wide to offer consumers attractive
products and services, such as online education, entertainment and
shopping. Nokia Display Products develops and manufactures computer
and workstation monitors, including applications for professional desktop
17
communication and new technology displays. Nokia is one of the leading
manufacturers of professional computer and workstation displays in Europe.
Nokia Industrial Electronics' main products are battery chargers for mobile
phones. Nokia is strongly positioned in volume production of chargers due to
the growth in the mobile phone market. Additionally, Nokia manufactures
other power supply applications for wireless communication, advanced RF
filters and antennas.
18
3 BACKGROUND INFORMATION ON GLOBAL LOGISTICS
3.1 Challenges set by global enviroment
To understand the environment and complexity behind competence building
of a global logistic application, such as SAP R/3, this chapter will give an
overview of the current trends within logistics. The end of the chapter will
combine these theories into the way logistics is perceived at Nokia.
The list below (table 1), quoted from International Marketing Strategy by
Phillips, Doole and Lowe (1995, 192) describes the problems in international
business planning and logistics system design. In planning its logistics
systems, Nokia is constantly trying to take into consideration most points
presented below. These points give an overall picture of the topics that the
developers and support staff are tackling when creating a new logistics
system.
Citing the International Marketing Strategy by Phillips, Doole and Lowe
(1995, 192) effective data systems are one of the main factors of an
international company. Often, one of the great difficulties in international
business planning is the long communication lines between headquarters
and subsidiaries. This often causes inadequate data flow, which results in
misunderstandings and wrong decisions being made.
Since this thesis concentrates on the logistics side of international planning,
the main points relating to logistics will now be shortly analysed. There are
two ways to approach the problems of international planning; managerial
(management) and procedural (processes). Although these topics are
presented here separately, they are naturally closely connected and
influence each other.
19
As it will be stated in Table 1, the headquarter management often has an
unclear allocation of responsibilities and authority. In practice this might
mean e.g. that persons working in subsidiaries might have several contact
counterparts within the headquarters and might get different kinds of
answers depending on whom one asks. In the longer run, this leads to
confusion and decreases the overall effectiveness of the company. This is
why it is important to have a clear split of responsibility and decision power.
It is also typical that the staff of headquarters have unrealistic expectations,
and give unclear guidelines to subsidiaries. This often creates frustration
among the staff of the subsidiary, sometimes including local management.
As a consequence the staff of the subsidiary might resist planning and
resent headquarter involvement.
Other points related to headquarter management revealed in table 1 are
insensitivity to local decisions and insufficient provision of useful information.
These points usually come from lack of experience of working at a
subsidiary. Sometimes cultural differences are also not taken into
consideration as much as they should be. From the end of the subsidiary
this leads to misinterpretation of information, lack of strategic thinking and
lack of marketing expertise.
From a process point-of-view headquarters often lack standardised bases
for evaluation, offer poor IT systems and support and therefore have poor
feedback and control systems. At subsidiaries this leads to lack of control by
headquarters, incomplete or outdated internal and market information and
insufficient communication with headquarters.
The implementation of SAP R/3 at Nokia aims to reduce these problems and
facilitate overall data transparency within the company. At Nokia Information
Management, the organisation responsible for the planning and
implementation of SAP R/3 is Demand/Supply Chain Applications. It is trying
to develop the overall logistics chain of Nokia together with Nokia business
groups and aims to answer the challenges set by global environment.
All of the points presented here are summarised in table 1in the next page.
20
Table 1. Summary of international planning problems.
Source: Phillips, Dole & Lowe, 1995, International Marketing Strategy.
Summary of international planning problems
Headquarters Overseas subsidiary
Overseas subsidiary
Management
- MANAGEMENT - - MANAGEMENT -
Unclear allocation of responsibilities Resistance to planning
Resistance to planning
and authority Lack of qualified personnel
Lack of qualified personnel or
Lack of multinational orientation Inadequate abilities
inadequate abilities
Unrealistic expectations Misinterpretation of information
Misinterpretation of information
Lack of awareness of foreign markets Misunderstanding of requirements
Unclear guidelines and objectives
Insensitivity to local decisions Resentment if HQ involvement
Insufficient provision of useful Lack of strategic thinking
information Lack of marketing expertise
- PROCESSES - - PROCESSES -
21
Processes
Lack of standardised bases for Lack of control by headquarters
evaluation Incomplete or outdated internal and
Lack of control by Head Quaters
Poor IT systems and support market information
Poor feedback and control systems Poorly developed processes
Excessive bureaucratic control Too little communication with HQ
procedures Inaccurate data returns
Excessive marketing and financial Insufficient use of multinational
constraints marketing expertise
Insufficient participation of Excessive financial and marketing subsidiaries
in process constraints
Source: International Marketing Strategy (1994)Table 2.
3.2 Role of Demand/Supply Chain Management in Logistics
According to Dobler & Burt (1996, 89) Purchasing and Supply Management,
perhaps the most interesting and challenging aspect of logistics is the
development and management of the organisation’s supply chain. This
chain is the upstream portion of the organisation’s value chain and is
responsible for ensuring that the right materials, services and technology are
purchased from the right source, at the right time, with the right quality. The
value chain is a series of organisations extending all the way back to firms
which extract the production materials, perform a series of value-adding
activities and fabricate the finished good or service purchased by the
ultimate customer.
Often, as is the case with Nokia, products are also purchased from
subcontractors. Nevertheless, from the customer viewpoint, these steps
must be smoothly bound into the whole logistics chain. Also, the
organisational barriers, presented in more detail in the graph "International
Planning Problems", must not become a hindrance in driving a value-adding
logistics chain to answer demands of the customer.
22
The most commonly used term for a company’s logistics chain is supply
chain. To better demonstrate the customer satisfaction thinking, at Nokia the
supply chain is called Demand/Supply Chain, refering to the ability to meet
the customer demands. This is also the term to be used within this study.
3.3 The Logistics Mix
Citing the definitions of logistics presented by Michael Quayly (1996, 57) in
"Logistics – an integrated approach", the main points of logistics can be
summarised in the Logistics Mix. These are:
- Planning and Marketing Strategy: the major influences of design
and marketing on material requirements and distribution requirements.
- Purchasing: source research and selection, negotiation, building
supplier partnership programmes.
- Production Planning: plant capacity, location and layout,
scheduling, manufacturing resources planning and the control and support
work in progress.
- Storage and Materials handling: the handling and storage of
goods, utilisation and packaging.
- Inventory Management: control over inventories, sustaining
minimum practical stock levels, minimising holding costs, wastage and
obsolescence.
- Warehouses and Stores: location, capacity, mix and operation.
- Transport: mode decisions, scheduling, routing and operation.
- Customer Service: demand forecasting, service levels, order
processing, parts / service support and aftermarket operations.
- Technical Support: the provision and management of the
systems needed to support these activities.
This study focuses on the last part of the Logistics Mix, that is the technical
support of a logistics system. The main emphasis here is to define how best
build the needed competences for SAP R/3 staff specialising in SAP R/3
issues.
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3.4 Globalisation – the major challenge in the branch of logistics
According to Logistics and Supply Chain written by Martin Christopher
(1998, 213) for the last decade the continued trend towards the globalisation
of business has been evident. Markets have become global in the sense that
the same brands and products are increasingly offered for sale around the
world. Equally apparent has been the move towards global sourcing and
manufacturing as companies concentrate their operations so that often just
one or two factories serve the whole world.
Paradoxically the trend towards the worlds globalisation has increased the
complexity of logistics. Often pipelines are longer with greater reliance on
outsourced supply chain partners. Furthermore, local differences in
requirements still exist; the needs of local markets must be balanced against
economic advantages of standardised products. Therefore the challenge of
global logistics management is to structure a supply chain that is agile and
flexible enough to cope with differences in customer requirements and yet
can enable the benefits of focused manufacturing. To summarise the current
situation one can say that global logistics management is continuously
compromising between the degree of globalisation and costs.
Besides the market demands and greater focus on the customer interface
decisions, a global company needs to consider how to organise its internal
functions. Examples of these internal functions are: planning of products,
purchase of materials and components, production, stock control and
inventories as well as transportation of goods to the final customer. Often in
big global companies, the internal units within the company purchase goods
from each other. To ensure fast and accurate deliveries to the final
customer, these operations need to be in harmony with each other.
Therefore the roles of the companys global processes and politics,
supported by well-fuctioning IT systems and solutions are vital. An effective
use of a logistics information system, such as SAP R/3, creates considerable
savings in the longer term. It also gives more visibility of the overall strengths
and weaknesses of a company, enabling company management to make
wise, fact based strategic decisions.
24
As a result of the time and financial assets saved, the company can
concentrate more resources on the customer services, transportation being
the most critical from a logistics point-of-view. Global business also enables
making international agreements with forwarding companies, adding up the
cost-saving procedures of logistics.
In order to achieve customer satisfaction and overall growth in the
productivity of the company, the whole logistics chain must be involved in
planning the procedures. The next paragraph will cover some points on
determining the supply and demand chain of a global company.
3.5 Redefining the supply chain
To be able to answer the demands set by the globalised markets, a business
needs to do a lot more than just place orders electronically. The complete
supply chain can be impacted by the technologies of electric commerce and
therefore needs to be redesigned accordingly.
Referring to the theories presented by Jon Hughes (1998, 149) in Transform
your Supply Chain there are five main ways in which electronic innovation is
impacting the supply chain and creating or redefining the market place:
1) Dematerialization : Reduction, removal and redeployment of
substantial assets invested in traditional sales and marketing. The traditional
channels of marketing and distribution, e.g. advertisements in print and
packaging can be, depending on the product, partially / entirely replaced by
electronic channels.
2) Disintermediation : Compression in the length of the supply chain
through the elimination of middle men in the sales process. Products
distributed via the Internet (E.g. Dell Computer Corp. PCs) are a good
example of reducing the cost via a more efficient supply chain.
3) Deverticalization : Creation of extended enterprises, linked
manufactures and inter-industry groups operating new electronic markets.
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Full involvement of all counterparts of a logistics chain in the process. This
phase often requires large-scale data integration.
4) Data Integration : Real time access, capture and transfer of data
between trading partners. This naturally means that the data systems in use
are capable of discussion with each other and needed interfaces are created
and fully tested.
5) Development of new products ; which support, sustain and
extend electronic commerce. The structure of products, e.g. modular wholes
that can be ordered in kits are examples of products supporting the
electronic commerce.
These five impacts present a huge potential for improvements in day-to-day
operational effectiveness. Naturally, their development takes a lot of time
and effort, since harmonious solutions for several counterparts need to be
agreed upon to be able to create a well-functioning and durable whole.
Businesses, able to answer to these arising needs immediately, will gain
new customers and create a competitive advantage versus competitors. To
ensure this competitive advantage, the development of the overall logistics
of a company should be in proactive way, one or even two, steps ahead of
the needs of the customers. To be able to accurately focus the development,
continuous investigations on the customer needs and a high level of
company internal communication and co-operation is also required.
3.6 Main logistics trends at the end of 20 th century
The figure 2, cited from the Transform your Supply Chain by Jon Hughes
(1998, 152), presents the trends in logistics for the last three decades of the
20th century. As one can notice, the connectivity to technology has radically
grown during the last twenty years, and will continue to do so since new
technological tools are created constantly.
As, during the last 20 years, the utilisation of uniform information systems,
as the Internet, has become a part of everyday life in most companies, the
26
technological connectivity has grown enormously and many traditional
boundaries of business, for example geographical distance, have fallen. At
the same time, the importance of "keeping up with the times" and
implementing the latest technological solutions within the company has
become even more important than previously.
Figure 2. Deverticalisation of logistics chain.
Source: Hughes, 1998,Transform your Supply Chain.
The crucial decisions, e.g. internal company choices of IT tool usage and
development of products, have to be in sync with the global environment.
These need to follow the customer needs at the highest possible level, in
order to ensure that the company is capable of responding to the customer
requirements and continuously gaining competitive advantage versus its
competitors. Internally, within the company, this naturally means continuous
change in the way of doing business and ability of the staff to adapt to the
changing environment.
3.7 Going beyond traditional data exchange – main ideas of EDI and ERC
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As a result of a fully integrated logistics chain, the company is ready to
answer to the demands set by new business technologies, e.g. EDI
(Electronic Data Interchange) and ECR (Efficient Customer Response)
which are presented next.
As discussed in the two previous paragraphs, globalisation demands high
transparency of information. This means that all counterparts (sales office,
production site, etc.) of the logistics chain need to be able to know exactly
what is the latest status of a customer order. Besides its accuracy, this
dataflow needs to be fast. To enhance the speed of information flow and to
reduce manual work, Electronic Data Interchange (EDI) tools and standards
have been created. The EDI is based on Efficient Customer Response
(ECR) thinking, where the information sent by the customer is automised as
highly as possible, leaving only checking and communication tasks to the
sales and production staff.
According to Transform your Supply Chain by Jon Hughes (1998, 161)
efficient consumer response (ECR) is about re-engineering the relationships
across a complete supply chain to achieve a more appropriate focus on
customer requirements. It involves all the companies in the supply chain, or
at least major players, working together to fulfil customer expectations –
better, faster, more responsively and at lower cost. According to Hughes, the
approach has received intense analysis in the retail sector but it is applicable
to all sectors with considerable product or service pipelines and where there
is variability in demand.
Electronic trading, usually incorporating electronic data interchange (EDI), is
central to the approach in order to remove any reliance on paperwork
systems. EDI has, of course, been around for a long time. It was first used in
1960s by the transportation industry to help solve delivery delays that
resulted in mountains of paper documents. Over the past thirty years its use
has increased; so much so that some major organisations, particularly
retailers, require their trading partners to use EDI as a condition for doing
business with them.
Using EDI requires replacing paper documents, such as quotations,
purchase orders and invoices, with electronic documents transmitted
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through data networks. On its own it delivers a number of valuable
operational benefits. In particular it brings traditional cost savings in less
paper work, lower mailing costs, improved speed of processing and
reduction in errors. It can also lead to reduced inventory and enhanced cash
management.
On the other hand, especially at the implementation phase, special attention
is required in data checking. It is also important to clearly agree on the
business and legal responsibilities with the customer. For example, order
changement times on behalf of the ordering counterpart need to be defined
on a detailed level. This means creating the same kind of rules for the shift
of responsibilities as the globally used Incoterms include.
In the case of Nokia, some business units have taken EDI functionality into
use with successful results. This requires however that the customers’ IT
systems are of very high quality and therefore the usage of EDI is not yet as
widespread as it could be at Nokia.
3.8 Moving towards a "pull" demand chain
During the last few years, special emphasis has been placed on trying to
move logistics functions from a "push" to "pull" mode. This means answering
the demands of the customer better, and constantly investigating the desired
changes to be able to further develop the offered services.
EDI processing partially answers these new needs set by the global logistics
markets. The real benefits of the technology, however, are delivered when
there is a shift from traditional EDI to a supply chain that integrates sourcing,
production, distribution, transportation and stock replenishment in a
simultaneous manner.
Traditionally, supply chains have often been push driven. Manufacturers
designed new products in line with their perceptions of customer preference
and customer demand. These products would be made in-house with some
input from third party suppliers. Products would be marketed and sold to the
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customer through retailers. Across the supply chain, due to inherent
logistical inefficiencies, production difficulties, variability in demand and poor
forecasting techniques, stock would pile up and all parties would experience
the costly frustrations of delays and lengthy lead times.
More recently, there has been a change from this push-driven supply chain
towards a more a pull-driven demand chain. In this way, changes to product
flow become more visible to supply chain participants concurrently as the
events causing the change occur.
The graph on the next page (Figure 3) describes the difference between a
"push" and "pull" logistics chain. Converting the supply chain to a pull mode
responds to customer driven demand, using latest technology to link the
chain.
As a result of a pull chain, with efficient consumer response, unusually high
unplanned demand is immediately communicated via the internet or EDI to
the distribution centres, production facilities, material suppliers and
transportation providers so that plans and schedules can be adjusted
automatically and simultaneously across the complete supply chain. Action
can then be taken to meet the new levels of demand quickly, with minimum
cost and, still, profitability for all the participants.
Figure 3. Converting the supply chain from "push" to "pull"
Source: Hughes, 1998,Transform your Supply Chain.
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3.9 Future of globalisation of logistics
As presented in the Logistics and Supply Management, written by Martin
Christopher (1998, 126) the implementation of global pipeline control is
highly dependent upon the ability of the organisation to find the correct
balance between central control and local management. According to
Christopher the experience that global organisations are gaining every day
suggests that certain tasks and functions lend themselves to central control
and others to local management.
Table 4 summarises some of the possibilities of how to share logistics
related business responsibilities on local and global level:
Table 4. Global co-ordination and local management.
Source: Christopher, 1998, Logistics and Supply Chain Management.
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Global co-ordination and local management
Global: Local:
- Network structuring for production - Customer service and transportation optimisation management
- Information systems development and control - Gathering market intelligence
- Inventory positioning - Warehouse management and local delivery
- Sourcing decisions - Customer profitability analyses
- International transport mode and sourcing - Liaison with local sales anddecisions marketing management
- Trade-off analyses and supply chain cost control - Human resource management
How the globalisation takes place in practice, is naturally a complex mix of
market demands and company internal decisions. Although it is impossible
to predict the future, it is clear that sophisticated business technologies will
gain more and more space in the development of global logistics within the
next ten to twenty years. Companies, which manage to make all
counterparts evolved in their logistics chain planning and full usage of global
logistics systems, will surely gain a competitive advantage in global markets.
The continuous technological change and growth of the markets also
require long-term, wise decisions on the used tools as well as pro-active
human resources management both on global and local level.
4 NOKIA SPECIFIC CONCEPT OF GLOBAL LOGISTICS
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4.1 Main players in Nokia global logistics
As presented in chapter 2, Nokia Group consists of Nokia Mobile Phones
(NMP), Nokia Networks (NET), Nokia Ventures Organisation (NVO) and
Nokia Communication Products (NCP). These business divisions are divided
into sales units, called National Organisations (NO) and production sites,
Business Units (BU).
The National Organisations, representing the sales side and therefore
closest interface with Nokias customers, are present in all countries where
Nokia has existing or potential markets. In 1999, the number of NO's
globally is 45.
The Business Units, responsible for the R & D (Research & Development)
and production of Nokia products are also located globally. Most production
sites have traditionally been located in Finland, but the globalisation of
recent years has changed the situation radically at Nokia. Currently, there
are Nokia production sites in 10 different countries, including Germany, UK,
Finland, Hungary, USA, Mexico, Japan and China.
The BU's and NO's are the core players in global Nokia logistics. These are
the units between which all main information of logistics systems, such as
SAP R/3, is transferred. Naturally, this is also where from the profit of Nokia
comes from, enabling further Research & Development, strategic planning
and other support functions.
Besides sales and production units, there are naturally several internal
service units. The most essential ones from a logistics point-of-view are
global logistics planning functions and Nokia Information Management. The
role of global logistics is to be responsible for defining the logistics
processes in use at Nokia. It is also responsible for defining the way the
speed, cost and quality of Nokias logistics chain is measured. Strategic
decisions are based on these measurements. Typical metrics which global
logistics develops are for example measures for stock rotation time, value of
inventory and total delivery time to customer.
33
Nokia Information Management is responsible for developping the required
technical solutions to support the business processes defined by global
logistics. The technical creation, deployment and support of Nokia business
applications such as SAP R/3 is the task of Nokia Information Management.
Besides NO (sales), BU (production), Nokia IM (technical solutions) and
global logistics (strategies) one main player in the Nokia logistics chain
remains to be mentioned. These of course are, last but not least, Nokia
customers. Their needs ultimately define how logistics is carried out and
developed at Nokia. Bringing in SAP R/3 information system as a Nokia wide
tool is one way to answer to the demands of Nokia customers. The goal in
the longer run is that by using this tool, Nokia will have more internal visibility
of its operations and can therefore serve its customers better. From the side
of the customer, the observed benefits are shorter delivery times and
accurate quality with no extra fees. These are the main reasons and goals of
the implementation and competence building projects of SAP R/3 at Nokia.
The next paragraph will go deeper into the details of the customer process,
explaining to which part of logistics chain the implementation of the logistics
application belongs to.
4.2 Nokia Demand/Supply Chain
The Customer Process presented in figure 6 describes the phases iof the
logistics chain at Nokia Networks. Even though NET (Nokia Networks),
NMP (Nokia Mobile Phones) and other Nokia units have slightly different
processes, this graph describes the main steps of the logistics chain at
Nokia. To ensure full customer satisfaction, all the steps presented below
must be carried out with a maximum level of service.
Table 5. Implementing Customer Process and Logistics Function.
Source: Nokia Intranet, 1998.
34
The main steps in the Nokia logistics chain are:
1) Defining the customer
Defining the customer takes place on a global level in all Nokia offices. The
account teams are the units mostly in contact with Nokia customers. They
give the biggest input in defining the customer, with the help of internal
marketing and research departments.
2) Selling
Also this function is mainly carried out by the account teams, being the main
interface with Nokia customers. Naturally, overall Nokia services, such as
marketing and internal system support give their input in this phase. The
customer orders are inserted in a global logistics system. The system in use
at most Nokia units is SAP R/3. Nokia Networks still uses some tailor-made
systems such as MLS (Modular Logistics System) and BMS (Business
Management System). Since the scope of this study is on SAP R/3, a more
detailed overview of SAP R/3 is given in the following part of the study.
35
3) Delivering
Delivering the ordered products and services within the timeframe wished by
the customer is the main point of the delivery phase. In order to conserve the
data related to this phase, Nokias global logistics systems include all steps
of customer service from sales order to invoicing the customer in an
accurate way. This information is linked with e.g. finance and control as well
as production data and can be used for future planning. For example
defining cost management metrics or shortening delivery times can be
mentioned as useful planning actions.
4) Caring
Maintaing ties with delivered products to the customers, offering extra
services (e.g. technical advice) and finding out future customer needs are
part of the Caring phase of the Nokia logistics chain. As a result of effective
implementation of these steps, an improvement of productivity and customer
satisfaction can be perceived.
SAP R/3 system implemented at Nokia aims to fulfill the demands set by this
logistics chain. To understand how Nokias internal organisation needs to
support the usage of SAP R/3, an overview on Nokia Global Support
Concept is given next.
4.3 Nokia IM Global Support Concept
Chapters 4.1 and 4.2 have presented the Nokia internal global players in
logistics and the broad way that the Nokia logistics chain works.
What are the main challenges from information management viewpoint at
Nokia ? How is the global Nokia organisation planning to answer these
challenges?
As presented in the previous chapter, a logistics chain is a complex issue,
involving most of the staff of a company. This is why it is crucial that all
36
counterparts of this chain within the company know their responsibility and
are driving for common goals trying to do their work as well as they can.
These goals are serious challenges in a "one-culture company", but in global
companies these issues take new proportions, in the end strongly
influencing the final result of a company.
Figure 6. Global Support Model for Nokia IM.
Source: Nokia Intranet, 1999.
To answer to these challenges Nokia Information Management has to built a
Nokia internal service model presented in figure 6. It is based on the thinking
that Nokia Information Management is a company-internal service
department, offering a similar kinds of IT services as the main service
providers (e.g. IBM, ICL, etc.) in the field of Information Technology globally
offer. Starting from this thinking, Nokia IM services need to be clearly
defined, measured and modified, flexibly answering to the demands of
Nokias growing business.
Nokia staff, using Nokia IM services, acts in the role of an internal customer
having certain expectations towards every-day IT services. Nokia IM needs
37
to be able efficiently to define, measure and develop its services to answer
to these needs. On the other hand, Nokia IM also has a strong role as an
executor or operative organisation of Nokia IT strategies. In the model
presented in figure 7, this contrast between Nokia IM and its customers is
shown via two different colours. The darker boxes present the key parts of
the Nokia IM organisation, whereas the boxes described in a lighter colour
represent the Nokia internal organisation working for logistics at Nokia.
From a system point-of-view, the main customers are Key Users and
Concept Owners. Key Users are experienced users of a system, whose role
is to act as practical help-persons in the work place as well as to inform the
users about the latest changes. Key Users are also the main interface with
the Nokia IM organisation. Concept Owners are persons responsible for the
logistics processes, both at local (sales/production unit) or global level. At
local level concept owner are usually logistics managers, having the overall
responsibility of the efficiency of Nokia logistics chain.
The Nokia Information Management part of application (e.g. SAP R/3)
support consists of a Service Desk, Application Support, Advanced
Application Support and Configuration Owners. A Global Infra Support
department exists to make sure all needed infrastructure related issues (e.g.
LAN/VAN connections etc.) are taken into consideration. Nokia Information
Management responsibilities are split into three categories: first, second and
third tiers.
The role of the first tier, Service Desk, is to act as a "filter" at the customer
interface, taking in application related questions in the form of both phone
calls and e-mails. When the first tier service desk has investigated what kind
of application problem the internal customer has (e.g. is it a SAP R/3
problem or a malfunction in the network), the issue is passed to the second
tier specialists.
These specialists, each focusing on a specific application (e.g. SAP R/3) use
a specific tool in which the issues arising from Nokia IM internal customers
are logged. From a learning point-of-view, this permits learning from
previous issues, but also gives statistics on which kind of topics Nokia staff
38
working in logistics might have problems with. The goal is naturally to
minimize these incidents. Second tier of application support is located
regionally, spread in different continents and countries. This is to ensure a
more direct contact with the Nokia IM internal customers and to facilitate
service within various time zones, since some Nokia IM services should be
available 24h/day.
If the second tier application specialists are not able to solve the problem,
they pass it on to the Advanced Application Support, centralized in Finland.
The Advanced Application Support studies the problem and then escalates
the answer to the originator of the issue via second tier application support.
Also at the third tier, the solution of the problem is logged into a system in
order to facilitate the learning and follow-up. If the Advanced Application
Support is unable to solve the issue, it is given for investigation and possible
changes to the development department. At this level, the technical problem
might be a system bug, which requires permanent changes to the system.
These changes are carried out depending on the nature and priority level of
the problem. The priority is decided based on how critical the change is to
Nokia business and how long would the technical change take time and
ressources.
In figure 6, the red line describes the SLA, Service Level Agreement, signed
to agree upon and measure the needed IT service level at Nokia. Via this
document, which is signed on a regular basis, Nokia IM services are
monitored and developed where necessary. The contract is signed at each
country, on the logistics side by the logistics manager and on the Nokia IM
side by the responsible service provider(s).
These are the main roles in the fluent usage of SAP R/3 system at Nokia.
Naturally, the higher the level of competence of these persons, the better the
whole Nokia logistics chain will work. This is why the next chapters will focus
on the SAP R/3 system itself and how it could be trained to Nokia
Information Management staff, who after this would act as global specialists
to tailor and implement it at Nokia.
5 SAP R/3 RELATED TRAINING AT NOKIA
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5.1 Introduction to SAP R/3
SAP AG is a global company with a turnover of 8,47 billion DEM (5,05
billion USD) in 1998. The company is the fourth largest independent
software vendor in the world, and a market leader in integrated company
application software licenses (36% market share).
As it was defined in chapter 1.3.3, the word SAP R/3 comes from the words
"Systems, Applications, and Products in data processing". The brand name
R/3 has been established as a global name for this logistics application,
although the current release number is already 4.5, and 4.6 release will be
available at markets in the beginning of 2000.
As presented in table 7, SAP R/3 application consists of integrated
application components (modules) that support the company’s business
transactions and operate in real time. One part of a companys process (e.g.
production planning or material management) is entirely included in one part
of the system. The success of SAP R/3 is based on its adaptability and
ability to be integrated to a company's ways of doing business. SAP R/3
chains up the processes and "builds a bridge" between these activities. As a
consequence, all important information can be found in one database,
simultaneously throughout the company offering fast and clear visibility on a
companys internal situation. No extra time is lost in trying to find, move or
configure information. Usage of SAP R/3 avoids the need for several
different kinds of, usually together incompatible systems. It also reduces the
efforts of building extra interfaces and carrying out integration testing
between data systems. SAP R/3 provides the company with a flexible
business infrastructure. Its applications link business processes with those
of customers and suppliers to create complete logistical chains covering the
entire route from supply to delivery.
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The picture below describes the main parts of SAP R/3:
Table 7. Stucture of SAP R/3 System.
Source: Nokia SAP R/3 Training material, 1998.
Modules like sales and distribution, material management, production
planning, warehouse management, financial accounting and human
resources management are all integrated into a workflow of business events
and processes across departments and functional areas.
The scope of this study is focused on the modules of Sales and Distribution
(SD), Material Management (MM) and Production Planning (PP), which are
the main modules including logistics functionality. Some issues closely
related to logistics can also be found under Quality Assurance (QA), Plant
Maintenance (PM) and Project System (PS) modules, on which the trainings
mentioned in chapter 5.8 give only an overview. The rest of the time of these
trainings is spend on SD, PP and MM. A more profound overview of the
content of SAP R/3 modules is given next.
5.2 SAP R/3 System Application components
41
Str Table 7: Stucture of SAP R/3 System
Table 8 below gives a more exact idea of the content of SAP R/3 application
modules. Naturally, this list only contains the main functions that are the core
ones for efficient information management in a global industry.
Table 8. Content of SAP R/3 application modules.
Source: Nokia SAP R/3 Training material, 1998.
Modules Examples of functionality
Financial Accounting (FI) General ledger, subsidiary ledgers, special ledger.
Controlling (CO) Overhead costs, product costs, result, profit centre.
Treasury (TR) Cash budget management, funds management.
Project System (PS) Networks, project cost accounting.
Human Resources (HR) Administration, payroll accounting, recruitment.
Plant Maintenance (PM) Work scheduling, maintenance planning.
Quality Management (QM) Quality planning, inspection, certificate, notification.
Production Planning (PP) Make-to-order production, repetitive manufacturing, KANBAN
production control.
Materials Management (MM) Inventory Management, purchasing, invoice verification.
Sales and Distribution (SD) Sales, shipping, billing.
Workflow (WF),
Industry Solutions (IS) Contain functions found in all applications.
As one can see, all major processes and steps within production industry are
included here. The content of SAP R/3 starts with Finance and Control (FI,
CO & TR) information, giving the backbone to the profitability and well
balanced cashflow of a company. These include the management of the
general ledger, subsidiary ledgers and special ledgers, enabling counting of
overhead and product costs, determining results on a regular basis and
offering detailed information on profit centers. The Treasury module
facilitates efficient cash budget and funds management, also offering
interesting information for the company's investors.
The Project System (PS) module offers a possibility of detailed follow-up of
costs of a particular project, summing up information from different modules
of SAP R/3. The Human Resources (HR) module facilitates the
administration, payroll accounting and recruitment activities of a company.
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The Plant Maintenance (PM) modules include work scheduling and
maintenance planning. In the case of Nokia one could use this functionality
e.g. for the scheduling of putting up a GSM network as well as planning and
monitoring its maintenance in the long run. The Quality Management (QM)
module includes quality planning, inspection, certificate and notification.
Certification can be tied-up to certain quality programmes, such as industrial
ISO standards. Production Planning (PP) modules ensure "make-to-order"
production, aiming at JIT (Just In Time) production to minimise stock costs.
The PP module also includes repetitive manufacturing of e.g. small
components and KANBAN production control. KANBAN technique is an,
originally Japanese production system, based on informative cards used in
production to represent the different stages of production. Materials
Management (MM) includes the needed functionality for inventory
management and stock levels. MM also includes functionality for purchasing
and invoice verification. Sales and Distribution (SD) modules consists of
sales, i.e. entering the customer orders into the system. After this, shipping
and billing functions are caried out via the SD module.
In order to ensure that these parts interact in the way they have been
technically designed to do, training and competence building become
crucial. To make sure all needed information can be found from the system,
its users need to understand why a specific functionality is used and what
are the consequences of inadequate information in a global company. This
is why the next chapters will focus on competence building of SAP R/3
application at Nokia.
5.3 Competence Building at Nokia
Building core competencies, such as knowledge of the SAP R/3 system,
starts with a systematic way of planning the learning process. First of all,
there naturally has to be a clear vision on what the final level of knowledge
should be. If this vision and the reasons behind cannot be clearly defined
and communicated, there is a risk that the motivation of the persons in
training might be strongly influenced, leading to mediocre results. Since
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efficient learning is a very individual process, the learner also needs to be
able to justify the extra time and efforts spend on training to understand the
personal benefits it will bring. This is why the common company level visions
behind competence building should be stressed. In practice this can be done
by e.g. inviting an important person within the organisation to open the
training session to show that competence building is seen as an important
part of main strategic intents of the company.
Based on the strategy of the company, e.g. becoming the leader of its field
within the next three years, pragmatic down-to-earth actions need to take
place in order to succeed in reaching the set goals. First of all, the common
targets need to be made clear to all staff. Secondly, the organisational
structure of the company needs to support these goals. What is needed for
efficient competence building at organisational level is 1) sufficient
knowledge on the needs of the organisation and 2) sufficient resources for
carrying out the plans made based on the needs. Most importantly though,
the degree of realisation of a strategy in the end relies on, is the goal setting
of each individual in the organisation. From a competence building view-
point, each employee of a company needs to be able to clearly answer the
following questions: "What do I need to know and why? How can I develop in
my work in the future? What is expected of me? " In the case of Nokia, to
better answer to these questions and clarify the strategic goals, the company
has launched a superior-employee discussion programme called IIP,
Investing In People. Depending on the task and situation of the organisation,
these discussions are carried out once or twice a year with each employee.
Specific goals are set, a general competence building/training plan is
decided and previous targets are measured during these discussions.
Besides acting as an excellent moment of communication between superior
and staff member, these discussions also act as a motivating factor for
competence building and continuous learning.
In companies the necessary knowledge usually consists of generic company
and unit level awareness of certain issues as well as of more task related
knowledge, to a greater depth. Together these build the necessary
competencies in a particular profession.
44
The first step in developing core competencies of a company is to attain the
company level skills. At Nokia these skills are considered at the moment of
recruitment. The first one of the the general skills that most Nokians need to
have is a good level of English, being the official language used within the
company. Besides the needed skills for a specific job (e.g. technical or
managerial skills) some Nokia specific personality-related factors are
measured. These have been translated into Nokia company values. Nokia
values consist of four main messages:
Respect of Individual,
Customer Satisfaction,
Achievement and
Continuous Learning.
Nokia recruiting process, including job interviews as well as a compulsory
psychological assessment for all new Nokians, test the thinking of a person
versus these base company values. An interest to respect these values
needs to be demonstrated before assessment of other profession specific
skills can start. When working at Nokia, the overall understanding of the way
the company functions grows naturally. This can be identified as company
level competence. The total competence level of a company is the sum of
the knowledge of its employees! Therefore competence building should be
targeted at the individual level based on common policies defined at
company level.
When the overall base company level competencies have been acquired,
the focus concentrates on unit level competencies. For new staff this means
getting acquainted with the domain of the unit one works in.
5.4 Competence Building of SAP R/3
At Nokia Information Management the main purpose of its staff is to develop
the internal IT functions of the company. Therefore Nokia IM staff has to be
professional in the branch of Information Technology. Depending on
professional tasks, this means different skills from having a broad overall
45
knowledge of the IT field of business, to very specific knowledge of
information technology products. The ultimate goal of the trainings presented
in the next chapters is to act as "train-the-trainer" teaching, forming
specialists of the SAP R/3 system who can then spread their information
within Nokia, by training the end users of the system. At Nokia Networks
alone, the number of end users of SAP R/3 will be approximately 2000-5000
users, depending how extensively the system will be used. Since these
users all have different levels of IT skills, cultural background, English
language skills and very heterogeneous knowledge of Nokia business, the
challenge of global SAP R/3 training is evident.
Having good SAP R/3 knowledge is basically a combination of the two
above-mentioned competencies; excellent IT skills and a good
understanding of main business processes at Nokia. To understand the
structure of SAP R/3 system, one has to have a common understanding of
business processes as well as a technical understanding of the system itself.
In the field of logistics, it is especially important to understand the
consequences between the different parts of the SAP R/3 system, which
correspond to business processes in a real company. This two-dimensional
aspect of SAP R/3 competence building is what makes it so complex and
unique.
Even if competence building of SAP R/3 might be complex, it is fairly easy to
identify individual skills that are needed to understand the system. The
challenge is to master all of these individual skills due to the extent of the
system. As it was presented in the previous chapter, SAP R/3 system is
divided into 12 different modules. The training of SAP R/3 is usually
concentrated on understanding the functionality of each of these modules
one by one. A SAP R/3 specialist usually specialises in one or two modules,
knowing them in detail. Since the system is being developed constantly to
answer the demands of latest trends in the branch of information technology,
mastering more than two to three modules is almost impossible.
As an example of latest development of SAP R/3, Internet linked
My.SAP.Com- solutions can be stated. These offer an user friendly interface
of SAP R/3 which can be run via Internet. In this case to understand in depth
46
the functioning of SAP R/3 Internet solutions one needs to not only
understand functionality of SAP R/3, but also to be able to successfully
implement solutions within the Internet. One needs to e.g. make sure the
infrastructure of the company supports such a way of doining business. If
the company decides to go even further in technological development and
starts using SAP R/3 for e-business purposes, these bases need to be built
on solid ground.
The example of usage of SAP R/3 via Internet explains why SAP R/3
specialists focus per module and concentrate on one limited area at a time
drilling the skills down to the individual level. In the case of Nokia, these skill
level targets should be based on key objectives set for each employee
working with SAP R/3. These target levels are defined during the annual IIP
(Investing In People) discussions. A specific, personal job description is
used as a basis for these objectives. The objectives are reviewed on a
regular basis, usually twice a year, when the need for refreshing old or
gaining new competencies is also discussed. Individual skills are usually
defined separately for each employee based on which an individual training
path can be designed.
5.5 Training Approach
Figure 10 describes the process of SAP R/3 Training Planning. This process
is naturally valid for any training planning, but especially suits the modular
structure of SAP R/3 system. This plan has been adapted to the
organisational needs of Nokia IM, Demand/Supply Chain Applications.
Building a solid training approach starts with creating a general training
plan. In a generic way it describes the content, length and timing of the
training. For example, in the case of DCA, the plan says that the trainings
are to be carried out in six –week modules. These entities (6 weeks /
specialisation area) will be run four times between November 1999 and
January 2000. To define such a plan, one should study benchmarking
examples on how trainings have been carried out elsewhere. In the case of
DCA, this example has been taken from the way SAP AG has globally
47
organised its trainings. This plan is just to give a general outline of the form
of the training. The next steps will help to define the details of the training.
Table 9. Process of SAP R/3 Training Planning.
Source: Nokia SAP R/3 Training material, 1999.
Secondly, to focus the content of the training, one needs to define the
target groups. In doing this one should bear in mind the individual training
needs of the staff to be trained. One can define the target groups e.g. by job
profile. In the case of Nokia IM, Demand/Supply Chain Applications, one can
clearly define the following groups: developers of Nokia IM software
products (creation phase), trainers of Nokia IM software products
(deployment phase) and those who need to be able to support the usage of
these products once they have been taken into use at Nokia (support
phase). Managers and team leaders of DCA organisation can also be
categorised as a separate target group. The specific training needs of each
of these groups are presented next.
One of the most challenging tasks in training planning is to define the
competence level that the staff should have after attending a specific
48
training. Figure 10 describes a three-level classification of SAP R/3
knowledge levels.
Figure 10. SAP R/3 Education knowledge levels.
Source: Nokia SAP R/3 Training material, 1999.
The first level is defined as a level of awareness on the topic. It consists of
an overview giving a generic insight into the structure of the SAP R/3
application. This level is aimed towards a broader audience, including
management, to help to understand the "big picture" of SAP R/3 application
related issues. This first level gives the fundamentals for further learning. If
a generic knowledge is needed, one can attend only the training of this
phase.
The second level is that of a working knowledge of SAP R/3 application. This
means more specific and deeper knowledge of the application. After
attending this level of education, the participants will reach a knowledge
level comparable to the globally offered SAP Academy, belonging to the
49
products of SAP AG. One of the main focus areas of second level of SAP
R/3 training is practical exercises with PC combined with brainstorming
groupwork. The goal is to reach a good level of application specific issues
and being able to apply the learned knowledge in practice. This is why the
teaching groups should, as far as possible, be divided by job roles. A more
specific content of this level will be presented in the next sub-chapter.
The third level consists of customised education, whereby the staff reach an
expert level in a specific field of SAP R/3 Application. The ultimate goal is
that after acquiring this level of knowledge the persons involved would be
able to instruct others and act as specialist of specific modules. This level
corresponds to the knowledge level needed to technically modify the
software and therefore applies mostly to developpers (creation phase) of
SAP R/3.
5. 6 Moving from general knowledge level into specialisation
To elaborate the topic of several knowledge levels further, one can ask what
is the accurate SAP R/3 knowledge level of Nokia IM Demand/Supply Chain
Applications organisation? As the two triangles in figure 11 present, the
knowledge level that this organisation has is mostly based on a general,
awareness level type of knowledge without real specialisation areas. There
are a few persons who have specialised into defined focus areas, but the
degree of the level of knowledge and clear specialisation roles are to be
developed. The way to do this, is to first decide the roles in the orgnisation
and the to deliver accurate SAP R/3 training to the staff needing it. The level
of deepness of the training depends on the decided job role. As a
consequence, the competence level of DCA staff should change so that the
focus would be in customised, deep level knowledge instead of general
awareness insight into SAP R/3 application.
The ultimate goal of this continuous competence building would be to have a
high level of SAP R/3 competence within Nokia. Instead of purchasing such
specialist services from Nokia external service providers, the idea would be
to have Nokians as specialists in this field of expertise. To mention some of
50
the advantages of developing the knowledge assets of Nokians in such a
direction, one could state 1) a higher level of engagement in projects, 2) a
better knowledge level of Nokia specific needs, 3) cost effectiveness and 4)
long term independent development. All of these factors naturally need to be
separately studied in a careful way and have therefore been left out of the
scope of this study.
The next section will concentrate on the structure and content of DCA
specific SAP R/3 training.
5.7 The structure and content of SAP R/3 trainings
The attached graph (Figure 12) gives a visual overview on how the
competence levels presented in the previous paragraph could be reached. It
includes both SAP R/3 specific trainings as well as supportive trainings.
5.7.1 Role of supportive training
As the majority of Nokia IM, Demand/Supply Chain Applications staff is fairly
new, meaning they have worked for Nokia less than two years, a "Supportive
Training" section has been included in the training structure.
Firstly, all staff to be trained in SAP R/3, should have attended the Nokia
Information Management induction trainings, meant for all new Nokia IM
staff. Depending on the previous experience and the new role of the
employee, these trainings consist of general PC skill trainings, information
on Nokia strategy and policies and job specific training. These trainings are
to be defined in conjuction with the superior of each employee, and have
therefore here been left out of the scope. Nevertheless, it is expected that
the persons entering DCA specific SAP R/3 training would have acquired
most of the content of the Nokia IM induction in order to gain the maximum
benefit from SAP R/3 training.
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Figure 11. Stucture of SAP R/3 Trainings.
Source: Nokia SAP R/3 Training material, 1999.
The supportive trainings are presented here to to give extra focus on certain
aspects, which are not covered in actual SAP R/3 trainings, but are
necessary for the staff working with the development, implementation and
support of SAP R/3. For example pedagogical, cultural and business
process skills are needed for staff who will be training the usage of the
application further for the Nokia SAP R/3 user community globally.
Problem solving and specific product knowledge is more necessary in the
application development phase, when it is customised to respond to the
needs set by Nokia business. At the phase when the application is in use
and being supported, customer service and problem solving could be the
main skills needed. Since this study concentrates on the SAP R/3 specific
training approach, the content of these trainings will not be handled in detail
here. The supportive trainings are included in the training structure just to
52
show tha SAP R/3 functional skills alone are not sufficient for reaching a
professional level of SAP R/3 specialism.
5.8 Role of SAP R/3 specific training
The SAP R/3 specific training has been divided into three categories:
1) Overview level
2) Deeper knowledge level
3) Expert level
5.8.1 Overview level
The goal of the first category, the Overview level, is to offer the following
skills:
a) Business Model Understanding : This requires that all the business
processes of the company have been agreed upon and documented. In
the case of Nokia IM, Demand/Supply Chain applications, this work is
ongoing. The part of DCA will concentrate on logistics modules process
modelling. Basically, the business model presents the Nokia logistics
chain.
b) Business Strategy Understanding : To understand why SAP R/3 is being
taken into use at Nokia. The main purpose here is to enlighten the
profitability-related issues, as well as consider the change management
related challenges.
c) Understanding of Organisational Development : How does
implementation of SAP R/3 influence Nokia organisationally and who are
the main groups affected by this change? An overview of how this
change relates to the accurate organisational situation is also presented.
53
d) General SAP R/3 understanding: The functional structure and general
SAP technology are presented here. The goal is to understand how the
modules of SAP R/3 application relate with each other and what kind of
challenges their implementation brings to a company.
e) Understanding how Nokia Business Model processes fit in SAP R/3:
After an overview on SAP R/3 related issues has been given, this part
will concentrate on Nokia specific issues and questions.
Altogether these Overview level training sessions last one week. As was
already mentioned, the goal of the skills gained via this training is a level of
general awareness of SAP R/3 related issues. This is why the graph
presented in the beginning of the chapter includes the 70/30% figure. It
demonstrates that as a result of the training, the attendees will have a focus
of 70% on the business related issues and a 30% focus on SAP R/3 related
specialisation.
5.8.2 Deeper Knowledge Level
The second category, Deeper Knowledge Level, aims to concentrate on
some of the issues presented in the overview part. It goes into the detail;
covering more functional application knowledge than process related issues.
The length of this category of training should be about 12 to 15 days,
depending on the way it is delivered. An important point is that this training is
PC based classroom training, giving a practical insight into the usage of the
application.
Deeper Knowledge Level offers the following skills:
a) Ability to understand Nokia business processes in SAP: Referring to what
has been learned in the Overview part, binding together the functionality
of SAP and the Nokia business process. Groupwork and business
simulation used as pedagogical methods besides theory and PC
exercises.
54
b) Detailed understanding of functional gaps of SAP R/3: There are certain
areas in SAP R/3, which are not directly applicable to Nokia. This deeper
knowledge training would give an insight to these possible "risk areas",
which will then be developed further by the creation departments of Nokia
specific SAP R/3 specialists.
c) Ability to configure a functioning system : This deeper knowledge part
would also include special focus on configuration of the SAP R/3
application. Experiences of SAP R/3 configuration that NMP (Nokia
Mobile Phones) already has, are used as internal benchmarking case
examples.
d) Knowledge of ABAP language: ABAP is the programming language used
for changing and customising the functionality of SAP R/3 application. The
usage of this programming language is needed if Nokia specific changes
are required. An overview of ABAP would be given as a part of the
Deeper Knowledge Level training. This would be especially important for
staff working in the creation and development phase of SAP R/3
application.
e) Understanding the SAP R/3 programming environment: Programming
related specific issues, such as Data Dictionary. Part e) also includes an
overview of the guidelines and policies of programming changes agreed
with SAP AG.
f) Basis Administration Fundamentals: Understanding of SAP R/3 technical
architecture, including knowledge of how to install and set up a SAP R/3
system. Brings ability to administer and maintain SAP R/3 clients.
These deeper knowledge level-training sessions would altogether last
approximately five weeks. Depending on job profile, staff could attend all of
these deeper knowledge trainings, or just a part of them.
5.8.3 Expert Level
55
The third category, Expert Level Training would include topics going into
more detail on the subjects presented above. On the other hand these
trainings would give a more global view on the present global position of
SAP R/3 development in the IT markets.
The main parts covered in the Expert Level Training are:
a) Batch handling related to administration of the application.
b) Nokia business specific issues, such as pricing and product information in
the system.
c) Case studies on SAP R/3 related issues in other companies.
d) Authorisation and security related issues.
The exact content and focus areas of the Expert Level Training can be
modified as the needs set by the project occur. The total length for all of
these trainings is five weeks, with a content corresponding to the SAP
Academy, proposed by SAP AG.
5.9 Further development of the Nokia SAP R/3 training concept
How should this training concept be developed in the future? At this stage
when the concept has not been tested at Nokia, it is impossible to answer
this question in total. The best way is to study the results of the first
trainings, acting as a pilot project. Based on the feedback given by
participants on these first trainings, planning future trainings should include
modifying the concept. Some specialists would call this analysing the
"lessons learned".
Another work method that has been used when creating this concept, but
could also be used more, is studying benchmarking examples of SAP R/3
training both within and outside Nokia. Detailed analysis of these
benchmarking examples gives new ideas and avoids using inaccurate
methods. Efficient analysis and usage of bechmarking examples also avoids
"re-inveting the wheel" and therefore reduces unnecessary doublework.
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One must rememberthat this case study offers only a snapshot of the present
situation. Therefore the training concept has been built on the existing
knowledge and strategies, which might and most likely will change in the
future. This is why the usage of this concept should be re-evaluated if it is to
be used in a new situation.
5.9 Summary of the delivery of the training
5.9.1 Goal knowledge level
All above mentioned trainings are "training the trainer" type, offering a deep
knowledge of the system. The target is not to teach the trainees to use the
system for daily business operations, but to become global specialists of the
system. After attending these trainings, the participants should have a
knowledge level similar to that of a certified SAP R/3 consultant, offered by
most leading IT companies globally. For example the following companies
offer SAP R/3 consulting services: SAP AG, ICL, IBM, Siemens-Nixdorf, Cap
Gemini, Andersen Consulting, KPMG, Pricewaterhouse-Coopers. SAP AG
is the owner of the global certification program, defining the necessary
knowledge for a person specialising in SAP R/3 related issues. Whether it
would be beneficial for Nokia to have their staff pass this certification test or
to create a tailor made certicifate for Nokia is to be decided. The test could
act as a motivational factor, but on the other hand put unnecessary stress on
the staff in training and in certain cases lead into "brain outflow" from the
company. The general view on SAP R/3 certification is however, that it sets
a certain goal to learning therefore encouraging the participants to seek
both general understanding of the system as well as detailed information.
The ultimate knowledge level of the staff that has participated in the trainings
carried out based on this concept, will be measured in the global
implementation project of SAP R/3 at Nokia. Here the ability to adapt and
apply all that has been learnt as well as how well one can communicate it to
participants is a true measure of the degree of learning.
5.9.2 Factors influcencing training decisions in companies
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How staff is trained in a company is an important decision, influenced by
several factors. One of the most critical factors are the financial issues. It is
often considered, that the main driver for training / not training staff within a
company are the financial reasons. As a positive effect of training, one could
mention attaining cost savings via having efficient and competent staff. This
is why one might think training realated decisions are made merely based on
financial factors. Using only this as criteria is nevertheless an over-
simlification. Besides the financial factors, Nordhaug (1993, 146-152)
reveals the following issues as important issues influencing training related
decision making; the size of the company, current situation of labour
markets, willingness to internalise competence, level of investment into staff,
position of human resource management within the company, number of
specialists, number of managers and upper employees meaning, so called
"white-collar" staff.
Nokia as a company invests a considerable amount of money into the
competence building of its staff annually. As was mentioned in chapter 5.3,
Nokia uses a global competence evaluation and personal target setting
programme, IIP (Investing In People). Besides this, each Nokian has a
personal training budget, which is to be used depending on the given tasks
and previous educational and professional background. Training and
competence building are seen as important factors at Nokia, which is
symbolised by one of the four company values: continuous learning.
5.9.3 Usage of company internal trainers vs. external specialists
A survey carried out by Mc Gill at Montreal in 1993 followed-up
implementation projects of new business applications in global companies.
The researchers visited in total about 80 companies approximately one
month after the staff had been trained. The goal was to measure the
knowledge of the staff on the new application. The tested companies formed
three groups. In the first, the companys own staff was trained to become
internal trainers. In the second group, external consultants trained the staff.
The third group consisted of companies that had not invested in training and
allowed a learning-by-doing approach in the implementation of the
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application. A further estimation round was carried out three years later to
find out how well the skills had been memorised and how the job
descriptions had developed during this time period. (Saari 1997, 38).
During the first round, the companies who had used external trainers came
up with the best learning results. Three years after this, the results were
inverted. Here, the long-term positive results created by the usage of
company internal trainers could clearly be seen. The companies, that had
chosen to use internal trainers, succeeded best in this survey. (Saari 1997,
38). The usage of own staff, instead of e.g. consultants, increased the level
of commitment of company staff (both trainees & trainers). It also gave a
certain continuation and basis for improvement via the knowledge remaining
"in-house" after the implementation projects were over.
The survey supports the idea that continuous learning happens best at a
company where a person who knows the organisation and is interested as
well as trained to teach others is constantly present. In this survey, it was
clearly seen that using external specialists gave quick results, but an internal
trainer resulted in long-term positive changes. There were clear learning
results, even though an internal trainer might have an inferior knowledge
level of the application than an external specialist.
5.9.4 Role of a company internal trainer
In formal organisations, each member of staff has an individual job
description. Certain criteria are set for a job and a person is chosen for the
task if these criteria are met (Bertrand 1972, 24). In the book Social
Organization, Bertrand (1972, 39-40) mentions the concept of a one-sided
role, where the person has only one role. In the situation of using company
internal trainers, the persons delivering training have two roles in the
organisation. They function as specialists in their particular field, where they
normally have already gained a certain level of experience. Besides this,
they carry out the tasks of a trainer, where they usually are beginners,
learning the teaching methods and related psychological factors. The role of
a company internal trainer includes the tasks of acting as a specialist and
59
coach to fellow colleagues, simultaneously having an almost managerial
role, acting as the support person of the staff being trained.
5.9.5 Organisational changes related to usage of internal trainers
This double role of company internal trainers leads to changes in the
organisation. One can look at the changes from the different viewpoints
within the organisation. Each person working in the company has individual
expectations and views on a company internal trainer. Since the
organisations consist of individuals coming from very different educational
and professional backgrounds, these separate needs and aspects have to
be taken into consideration.
Besides the changes the trainer him/herself experiences in this new task, the
change also has consequences within the organisation. If the task of trainer
is a full-time job, the manager of the trainer might "loose" an employee. The
manager needs to reschedule the work amounts and might also have to deal
with other staff memers reactions, e.g. feelings of favouratism. The human
resource department will gain many benefits from the trainers, e.g. in terms
of defining the knowledge level of the organisation. Also the top
management have their own views on the benefits and disadvantages of
usage of company internal staff in training. All these factors and their
emphasis results in the final outcome of the role of the trainer and the
changes in the organisation.
5.9.6 Managing the change
In today’s companies, especially ones like Nokia, working in the branch of IT
business, the only thing which will surely remain and be constant is the
change. The daily work life of the IT sector is changing into producing new
concepts and methods at an accelerated speed. In this kind of environment,
being able to learn "digested" knowledge is not enough. Under these
circumstances, the ability of staff to integrate oneself into the changing
environment, being able to reproduce information and acting in a pro-active
way are key factors to success.
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Also the role of training has to be redefined accordingly. The role of training
is not only to transmit the latest information and knowledge. The trainer
needs to act as a specialist and coach to the staff in training who individually
focus on the area of study and solve problems involved in the topic. In this
frame, adapting to new situations and therefore managing the change can
be defined as a new way of learning.
Indeed, competence building is continuous learning, especially to the ones
planning it in global companies. In the information society of the future,
effective competence building is what will bring added value to companies
and define the true success stories in economics of the 21st century.
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6 CONCLUSION
6.1 Objectives of the study
As already mentioned in chapter 1.4, the main objectives of this study are to:
I) Study the specific training needs of a certain target group, which in this
case is the staff of Nokia IM / DCA organisation.
II) Organise these needs into a stuctured training plan.
III) Plan more specific training content on a more detailed level.
IV) Present pragmatic ideas on the implementation of phase of the training.
The emphasis of the study has been on phases I and II as well as on a
pragmatic style (e.g. giving examples). What are the exact results of the
study and how well these objectives have been met is pondered on next.
6.2 Main results of the study
As presented previously, one of the objectives of this study is to offer the
needed background information on the environment of logistics. This
objective was fulfilled in chapter 3. Nokia specific information was given in
chpter 2 and 4. As a result the reader has a broad picture of the accurate
situation of Nokia as well as the challenges of the field of logistics in the
future.
As the main result of this study the reader can access a full SAP R/3 training
plan, presented in chapter 5. Creating such a plan was the main objective of
62
the study, and therefore it can be said that this objective has been fulfilled.
The plan offers an overview on SAP R/3, information about competence
building in general at Nokia, definition of expected knowledge levels,
describtion of the training content of quite a detailed level and discussion on
the role of SAP R/3 specific training.
6.3 Reliability and validity
Since the main idea of the study is to act as a pragmatic case study, also the
criteria set to evaluate its realiability and validity should be pragmatic. This is
why a case study, relying on expert opinions and related written materials,
was chosen as a research method. Choosing another method, e.g.
interviews or comparison to existing surveys would have been inefficient due
to the tight time schedule set by Nokia. Also, the sources used in this survey
offer the best possible knowledge on the topic at the moment, being market
leaders at their branche (e.g. Andersen Consulting, Helsinki School of
Economics library and Nokia specialists).
As a conclusion one can say that the validity of the study is high, due to the
high correspondance with Nokia needs at the moment. The validity of the
study could be better, since not all available sources have been studied. The
validity would be higher if e.g. all existing studies written on the topic
previously would have been taken into consideration.
6.4 Evaluation of the progress of the dissertation
The writing of this study started in May 1999 and finished in November 1999.
There was one month summer break during which the study was not
handled. Althought this break influenced the final delivery time of the study, it
was a good opportunity to let the ideas handeled in the study mature. During
this time the scope and content of SAP R/3 training were clarified within
Nokia. This helped to draw conclusions and come up with final results.
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Seeing the link between an information system (SAP R/3) and the complex
logistics challenges set by global environment was the main personal finding
while processing this study. Earlier, they had seemed to be slightly separate
issues, which could e.g. in training be handled separately. Processing this
study gave an understanding on how the competence building and training
of these complex topics can be better tackeld at Nokia. The main "golden
rule" to be developed in personal work, is to aim at higher co-operation
between departments. This is to ensure that all have a common view on the
responsibilites and tasks as well as ensuring that all essential facts are taken
into consideration in the trainings.
6.5 How the topic could be developed further in other studies
The topic of logistics is something which has been studied roughly only for
the past 20 years and there are still many essential findings to be made. As
people and businesses will in the future more and more rely on technology,
the link between these two issues is an interesing point of study. Studying
e.g. what the biggest gaps in a logistics chain are and how technical
innovations (e.g. Internet, e-business, WAP phones etc.) can make this
chain more efficient are exiting subjects.
Also studing the human side of this evaluation futher, would be interesting.
What are the best ways to learn about technical devises and what motivating
factors need to be involved in this learning? How can the education
structures better answer to the techinal and global demands of future?
What is the role of a human being in this new kind of society ? The questions
are endless. Although they have been left out of the scope of this study, the
links to these questions are evident. How the information society of
tomorrow will answer to these topics remains to be seen.
64
REFERENCES
Bertrand, A.L. 1972. Social Organisation. A general systems and role theory
perspective. Philadelphia. F.A. Davis Company.
Brealey A. Richard & Myers A. Steward 1996. Principles of Corporate
Finance. McGraw-Hill Company.
Bruun Staffan, Wallen Mosse 1999. Nokian Valtatie. Tammi.
Christopher, Martin 1998. Logistics and Supply Chain Management . Second
edition. Financial Times-Pitman Publishing, London.
Christopher, Martin 1997. Marketing logistics.
Dobler, Donald W. & Burt, David N. 1996. Purchasing and Supply
Management
Harris, Philip 1996. Managing cultural differences.
Hughes, Jon & Ralf, Mark & Michels, Bill 1998. Transform Your Supply
Chain. International Thompson Business Press, London.
Inkiläinen, Aimo 1998. Managerial views on distribution systems: heuristic
justification of centralisation and postponement. Helsinki School of
Economics and Business Administration.
Isaacs, Alan & Martin, Elisabeth 1993. Oxford World Business Dictionary.
Mäkelä, Jukka 1999. Busines.fi- magazine / September.
Nordhaug, O. 1997. Human Capitals In Organisations. 1993. Norway.
Scandinavian University Press.
65
Phlliips, Chris & Doole, Isobel & Lowe Robin 1995. International Marketing
Strategy – Analysis, Development and Implementation. Routledge
Publishing.
Porter, Michael 1990. The Competitive Advantage of Nations.
Quayle, Michael 1994. Logistics – an integrated approach.
Saari, J. 1997. Continous Change Comes from Inside. WSOY.
Tinnilä, Markku 1997. Division of service and business processes. Helsinki
School of Economics Business Administration.
Wade, Danis 1997. Creativity and preferred decision-making style: a cross-
cultural comparison.
Yin, Robert K. 1994. Case Study Research – Desing and Methods.
Research Reports:
Andersen Consulting and Granfield School of Management for Council of
Logistics Management 1997. Reconfiguring Europen Logistics Systems.
Bask, Anu & Vepsäläinen, Ari 1996. Opening markets for logistics.
Publications by the Finnish Association of Logistics.
Korpela Jukka 1998. Connecting customers' preferences and importance
and logistics capabilities in distribution network design. Lappeenranta
University of Technology.
Michigan State University for Council of Logistics Management 1992.
Leading Edge Logistics Competitive Positioning for the 1990s.
Other sources:
66
Nokia annual report & financial press releases, 1998
Nokia Intranet (Excluding confidential material)
GLOSSARY OF TERMS
DCA = Demand/Supply Chain Applications. Department of Nokia IM.
Demand/Supply Chain = Management of upstream and downstream
relationships with suppliers and customers, to deliver superior customer
value at less cost to the demand/supply chain as a whole (Martin
Christopher, 'Logistics and Supply Chain Management' 1998).
EDI = Electronic Data Interchange.
ERC = Efficient Customer Response.
ERP System = Enterprise Resource Planning System. A general term for
large company information systems such as SAP R/3, Baan or Oracle based
tools.
IIP = Investing in People. Yearly discussions with manager and employee,
durig which targets are set and previous achivements measured.
IP = Internet Protocol.
IT = Information Technology.
IM = Information Management.
JIT = Just in Time. A method of production aiming for reduced stock levels.
SAP R/3 Modules = Business Components / Modules of SAP R/3 system
(eg. 'FI' for Finance, 'SD' for Sales and Distribution).
67
Nokia IM = Nokia Information Management, a Nokia internal IT strategy and
service provider.
NMP = Nokia Mobile Phones. The largest business group within Nokia.
NTC = Nokia Telecommunications. Old name of Nokia Networks, which was
launched as the new name 1.10.1999.
NET= Abbreviation for Nokia Networks, the new name of Nokia
Telecommunications. NET is the second largest part of Nokia Group.
SAP AG = Name of the German company providing SAP R/3 Application.
SAP R/3 = Release 3 of the SAP Enterprise Applications Software,
that supports company's business transactions in eg. Logistics, Finance,
Human Resources, Production.
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