As multinational firms increasingly adopt collaborative technology with supply chain partners in other countries, their implementation strategies need to accommodate cultural differences. This paper draws upon Hofstede’s framework for understanding national cultural characteristics to propose differences in implementation timing and strategy. These propositions are tested with a case study involving a large U.S. based multinational’s implementation of Collaborative Planning, Forecasting and Replenishment (CPFR) with partners in four different countries: U.S., Germany, China, and Poland. This research suggests that cultural differences impact the rollout life cycle for CPFR. The authors recommend that (1) implementation strategies should match national culture, (2) implementation timing can be a function of national culture, and finally (3) customer readiness assessments for CPFR rollout should include an assessment of national cultural differences.
TopIntroduction
American firms are increasingly going global. However, attempts to transfer U.S. management practices to other cultures often result in failure (Hirst et al., 2008; Kim, Park, & Suzuki, 1990; Michael, 1997). U.S. management practices need to be adapted to other cultures after identifying needs, values, and behaviors of that culture (Matic, 2008) For example, managerial behaviors that are positively related to job performance in the U.S. are not related to job performance for American expatriates working in other countries (Black & Porter, 1991); successful U.S. based MBO (management by objective) programs often do not work well in other cultures (Hofstede, 1984).
In particular, U.S. companies today are increasingly adopting collaborative management practices with global partners in extended supply chains. They often turn to inter-organizational collaborative systems and processes such as Collaborative Planning Forecasting and Replenishment (CPFR) to support these efforts. Supported by information technology (IT), CPFR is a management practice that combines the intelligence of multiple trading participants in the planning and fulfillment of customer demand (VICS, 2007b). It was developed and expanded by U.S. corporations Wal-Mart and Warner-Lambert (now Pfizer) and later adopted by many large multi-national corporations to work with partners in other countries and cultures.
Successful CPFR implementation involves forging alliances with new peer-to-peer relationships between personnel in different companies who may cross national borders. Common goals and measures require establishment of collaborative relationships rather than traditional and sometimes adversarial supplier-customer relationships. To be successful, CPFR participants must build a collaborative mindset and learn new processes. Organizational roles must change so that partners become customer- or supplier-focused rather than product-focused (Cederlund, Kohli, Sherer, & Yao, 2007). Organizational learning about these new relationships and processes can be influenced by cultural differences between the partners.
CPFR systems support collaboration by providing a mechanism to alert partners of discrepancies between plans and forecasts and support the partners’ ability to collaborate on forecasts and replenish inventory in the channel using this collaborative input. CPFR systems are complex and their global implementations require significant investments. The role of complementary investments in successful IT implementation is widely accepted (Barua, Lee, & Whinston, 1996; Davern & Kauffman, 2000). When multiple partners participate, concordance investments that involve mutual adjustment of inter-organizational processes and relationships are needed for sustained collaborative success (Kohli & Sherer, 2006; VICS, 2007a). Partners must invest in organizational learning to adjust their processes to effectively use these systems.
A large body of literature has developed around the impact of cultural differences on learning, change management, conflict management and negotiation, and alliance formation and characteristics (see House et al., 2004; Hofstede, 2001, 2006, for a review), as well as its impact on IS management (Ford, Connelly, & Meister, 2003; Kappos & Rivard, 2008). Given the nature of the concordance investments required when implementing CPFR, it is expected that national cultural differences between partners may influence the learning of the new processes required to effectively implement CPFR processes and systems.
As more companies attempt to implement collaborative supply chain practices with partners in other countries, it is important to understand how cultural differences might influence implementation practices. Since CPFR requires significant process and relationship change, cultural differences are expected to affect the nature of the implementation process. Understanding these differences could help companies to develop appropriate strategies for implementation with international partners.