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Implementation of fashion ERP systems in China


Int. J. Production Economics 146 (2013) 70–81

Contents lists available at ScienceDirect

Int. J. Production Economics
journal homepage: www.elsevier.com/locate/ijpe

Implementation of fashion ERP systems in China: Case study of a fashion brand, review and future challenges$
Tsan Ming Choi n, Pui Sze Chow, Shuk Ching Liu
Business Division, Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

a r t i c l e i n f o
Article history: Received 29 February 2012 Accepted 4 December 2012 Available online 20 December 2012 Keywords: ERP systems China Order-to-cash module Fashion industry

a b s t r a c t
Enterprise resource planning (ERP) systems have been widely applied in the fashion industry. An ERP system is a cross-functional system which integrates various units in the company with an attempt to shorten processing time, increase responsiveness, and achieve competitive advantages. Among all the modules popularly included in an ERP system, there is a critical one called the order-to-cash (OTC) module. In this paper, Levi Strauss & Co. in China-Hong Kong (LSCO-CHK) is selected as the target case company. Via semi-structured interviews and discussions with some staff members of the company, we examine the implementation of OTC module in LSCO-CHK’s ERP system. The bene?ts and the problems encountered during the system development process are examined. Based on the case study results, and the extensive literature review, we conclude that whether implementing fashion ERP systems in China can successfully enhance production and operations management relies on many measures which include (i) understanding the ‘‘human mindset’’ of Chinese society, (ii) showing full respect to the staff members during the implementation process, (iii) emphasizing the importance of guanxi with both internal staff members and external business partners, (iv) providing attractive tangible and intangible incentives to participants. We argue that if the above measures are well-taken, implementing technological information systems solutions in China can be more successful than the ones in the western countries because of the Chinese cultural merit which treasures ‘‘cooperation’’ when Chinese people feel respected. Finally, future challenges and research opportunities on implementing fashion ERP systems in China are explored. & 2012 Elsevier B.V. All rights reserved.

1. Introduction Speed to market is one of the most important competitive advantages in nowadays’ fashion retail market (Chen et al., 2010; Choi, 2012). As the fashion cycle is short (which leads to a more volatile marketplace) and fashion icons are less predictable (Gillooly, 1998), both speed and ?exibility are required to satisfy customers who expect increasingly good value and more fashion content (Yang

$ We sincerely thank the editor Professor Ling Li and two anonymous reviewers for their constructive comments which led to the major improvement of this paper. We also thank the interviewees from Levi Strauss & Co. in China-Hong Kong (LSCO-CHK) for their kind inputs. As a remark, the information provided by the interviewees is based on their best knowledge and personal comments. This point must be well-understood when we interpret the respective ?ndings reported in this paper and in fact, some kinds of personal bias are inevitably present. All authors have substantial contribution to this paper and the listing of authors follows the alphabetical order of their surnames. This research is supported in parts by The Hong Kong Polytechnic University’s Research Funding under the grant numbers of G-YJ23 and G-YK71. n Corresponding author. Tel.: ? 852 2766 6450. E-mail address: jason.choi@polyu.edu.hk (T.M. Choi). URL: http://www.acad.polyu.edu.hk/~tcjason (T.M. Choi).

et al., 2011). In order to enhance the responsiveness of the whole supply chain, time management and the use of technology become crucial topics in the industry (Al-Mashari and Zairi, 2000; Bertolini et al., 2004; Choi et al., 2006). The concept of quick response (QR) was developed in the 1980s as a tool of improving response time in the textile production pipeline (Gargeya and Brady, 2005; Choi and Sethi, 2010). In general, QR refers to the strategy that aims at improving the response time from the selection of a garment by a retailer to its replenishment by a manufacturer. Many fashion retailers, such as Zara, New Look and George at ASDA, have developed a variety of QR strategies that increase their responsiveness to the volatile market (Gillooly, 1998). This trend has also spread to China and a lot of brands in China, such as Vancl (Wei and Zhou, 2011), are also adopting quick response in their fast fashion concept. Responsiveness requires information sharing among all members across the supply chain and thus how to facilitate channel coordination is a major problem to address (Li et al., 2008c; Gao et al., 2008; Xu et al., 2011; Xu et al., 2008a,2008b). Enterprise resource planning (ERP) system solution has been employed to deal with this issue by re-engineering the supply chain within and beyond an organization (Li and Zhao, 2006; Li et al., 2001;

0925-5273/$ - see front matter & 2012 Elsevier B.V. All rights reserved. http://dx.doi.org/10.1016/j.ijpe.2012.12.004

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Aubert et al., 2012; Fryling, 2010; Johansson and Newman, 2010; Koch and Mitlohner, 2010; Li, 2012; Xu, 2007, 2011). ERP platform is speci?cally necessary in the fashion industry. This is because the fashion industry and its supply chains face a demanddriven market and it becomes upmost important to obtain the latest market information and share the information among the channel members (Fernie, 1994). However, poor ERP implementation frequently occurs owing to: (1) complex implementation as it requires cross-module integration; and (2) culture differences and lack of communication between the organization and endusers. As a result, the cost to operate and maintain an ERP system is substantial (Soh et al., 2000; Umble et al., 2003). A considerable amount of literature works have been devoted to ERP implementation (Li et al., 2008a, 2008b; Niu et al., 2011; Olson and Staley, 2012; Qi et al., 2006; Yin and Xie, 2011). Undoubtedly, since China is the ‘‘world factory’’ for the fashion industry and ERP systems are crucial for modern production and operations management in fashion, studying fashion related ERP systems for China scenario is a very important topic. However, to the best of our knowledge, there is no prior work which explicitly examines the fashion ERP system in the context of China. As a result, this paper contributes to the literature by being a pioneering discussion paper which aims to explore the reasons and critical success factors of ERP implementation speci?cally in China and its impacts to a fashion enterprise’s ef?ciency in production and operations management. Speci?cally, we aim at answering the following ?ve research questions: (1) How has the literature advanced regarding the implementation and applications of fashion ERP systems in China? (2) What are the possible issues that a fashion company may encounter during ERP system implementation in China? (3) What are the factors that may lead to successful ERP system implementation for a fashion company in China? (4) What are the strategies that can be taken by a fashion company to improve its production and operations management in China via ERP systems? (5) What are the challenges and future research directions for fashion ERP system implementation in China?

Fig. 1. Research approach adopted in this paper.

The organization of the rest of the paper is as follows. We conduct in Section 2 a comprehensive review of the literature on the bene?ts, the challenges, the critical successful factors and China-scenarios for ERP implementation. We also develop the research model in Section 2.5. Then, we introduce the case study research methodology, review the system implementation project of LSCO-CHK, and discuss the outcomes of the implementation in Section 3. Afterwards, we explore the various critical factors deemed to affect the LSCO-CHK’s successful ERP implementation in China in Section 4. We conclude with a discussion of future research in Section 5.

2. Literature review 2.1. Bene?ts of implementing ERP systems ERP has been widely implemented to improve communication within internal and among external business networks, manage transactions and processes in the logistics pipeline, connect and share information along the supply chain from the suppliers to the customers, as well as enhance the decision-making process (Davenport, 2000). It is well documented in the literature that ERP system implementation can bring signi?cant bene?ts. Its major bene?t lies on the ability to manage and integrate business processes across various organization functions so as to minimize the information sharing time and streamline the business processes, and in turn enhance the company’s competitive advantage (Soh et al., 2000). Other advantages can be categorized as tangible bene?ts (e.g. inventory reduction, order management improvements, ?nancial cycle improvements, and transportation/logistics cost reduction, etc.) and intangible bene?ts (e.g. information visibility, customer responsiveness, standardization, ?exibility, globalization, and dismantling inef?cient legacy systems) (Umble et al., 2003; Wang et al., 2006). ERP systems can also provide information for companies to identify the causes of uncertainty that accounts for delivery delay so that the companies can tackle to the right areas for business improvement (Koh and Saad, 2006). In addition, ERP systems can also achieve (i) more uniform manufacturing organization structure, (ii) more ef?cient operations and customer-driven business processes, and (ii) ?rm-wide information visibility and consistency for improved decision making (Laudon and Laudon, 2012). 2.2. Reported challenges and critical success factors (CSFs) of implementing ERP systems The bene?ts we reviewed in Section 2.1 above have driven many companies to launch their own ERP system projects. However, many of these projects resulted in bad failure. In the

After addressing the above ?ve questions, we strive to derive some insights on why China’s manufacturing sector has been successful and growing at a much faster speed than many places in the world such as the US. Owing to data availability and the prominence of the company, we take Levi Strauss & Co. (LSCO) at China-Hong Kong (LSCOCHK) as our case study target in this paper. Speci?cally, we ?rst examine the closely related literature and identify pertinent issues such as the critical success factors (CSFs) and implementation challenges on ERP system. We then proceed to conduct a detailed investigation about the recent implementation of the order-to-cash (OTC) module in LSCO-CHK. We are interested in the OTC module as it concerns the various important processes involved in production and operations management from order placing/ replenishment to delivery, and payment. All these processes are critical to the responsiveness of a fashion retailer and they require prompt and close communication between the fashion retailer and its suppliers. With the case study, this paper aims at illustrating the various factors to which a fashion retailer should pay special attention when adopting the module for its success in China. Finally, by combining our ?ndings from LSCOCHK and the literature, we discuss the CSFs for and the challenges on ERP system implementation for fashion enterprises in China, and explore future research opportunities. Fig. 1 depicts the approach adopted in this paper.

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literature, Hines (2001) points out that about 70% of ERP system projects fail after three years’ implementation. Problems commonly found during ERP implementation include: dif?culties in con?guring ERP systems to ?t with actual business processes, data conversion/ clean-up from legacy systems, users’ reluctance to accept changes in performing daily tasks (Yusuf et al., 2004), unrealistic project objectives, insuf?cient technical support, people factors (Wickramasinghe and Gunawardena, 2010), frequent changing requirements, over-customization (Yu, 2005), challenges associated with organizational change, integration of the respective supply chains (Themistocleous et al., 2004), and lack of education and training (Rothenberger and Srite, 2009). Externally, companies installing the ERP systems may also encounter resistance from their business partners to share information (Kelle and Akbulut, 2005). In the light of these challenges, many researchers have identi?ed various critical success factors (CSFs) for ERP adoption. These CSFs mainly refer to the fact that ERP systems should be implemented in a carefully planned, progressive manner with substantive communication and training across the organization (Motwani et al., 2002). In particular, Li et al. (2008b) reveal that manufacturing infrastructure, which includes the dimensions of workforce, quality management, process re-engineering, production planning and control, organizational policies, and rewarding systems, plays a crucial role for the success of the ERP system implementation project. To be speci?c, they ?nd that implementing new information systems often requires signi?cant changes in business process, employee skill requirements, and measurement systems. Thus, the related manufacturing infrastructure preparation is necessary for the implementing ?rms to bene?t from the ERP system. The ‘‘education and training’’ related staf?ng aspect is another most important factor that attributes to the success of an ERP implementation project (Sun et al., 2005; Laudon and Laudon, 2012). Davenport (2000) states that amongst the three main areas that ERP system implementation costs are incurred (namely: software, hardware, and personnel), most companies pay the least attention to the personnel aspect, which is the most expensive and ‘‘dif?cult to quantify aspect’’. Many researchers suggest that appropriate organizational culture and leadership strongly facilitate ERP adoption (e.g. Umble et al., 2003; Jones et al., 2006; Ke and Kwok, 2008; Chen et al., 2009). Subjective culture within an organization (e.g. senior management commitment, peer pressures) also in?uences the users’ utilization of the ERP system (Chang et al., 2008). 2.3. Implementing ERP systems in China For companies in China, organizational (as well as social) culture (Hofstede, 1984), languages, and ‘‘relationship amongst acquaintances’’ (guanxi) play very important roles in implementing ERP systems (or the MRP-II system which is an earlier version of ERP) (Wang et al., 2005; Li, 2012). In particular, being a nation and civilization emphasizing strongly on guanxi, Chinese people tend to be integrated into groups and have a high degree of uncertainty avoidance (Shenkar and Glinow, 1994). These characteristics may add more challenges to ERP system adoption. In the literature, Xue et al. (2005) examine an interesting issue on the possible reasons explaining why many leading international ERP solution vendors cannot dominate the ERP system market in China. They conceptualize the ERP system as a part embedded in a complex social system. They study via both the historical perspective and the social-cultural real cases perspective the ERP system implementations in China. They discuss how China’s ERP system evolution is different from the Western world. They also analyze the implementation challenges on ERP system in China in the future. Zhang et al. (2005) study ERP system implementation of manufacturing companies in China. They ?rst comment that

the implementation failure rate is high and many ?rms in China simply cannot achieve their intended implementation outcomes. They then develop via a case study approach an ERP implementation success framework to identify the critical success factors and derive the success performance measures. Avison and Malaurent (2007) conduct a case study research and describe a largely unsuccessful ERP system implementation project of a French company in its Chinese subsidiary. They ?nd that this system has been rolled out successfully in many other places elsewhere but failed in China owing to the factors that include language, governance, political, and legal issues. Marbel and Lu (2007) employ a case approach to examine the cultural differences between China and the Western world related to enterprise system implementation. They identify the importance of relationship (guanxi) as one major factor. They suggest different approaches for enterprise system adaptation with respect to the Chinese guanxi-based business practices. They generalize the result and propose a theory to combine culturedependent characteristics with information system implementation practices. Chien et al. (2007) apply the centripetal and centrifugal forces model to examine project management factors which relate to the success of ERP system implementation. They make use of data collected from 244 small and medium-sized manufacturing companies in China (including Taiwan) for statistical analysis. They reveal that the balance of centrifugal and centripetal forces is critical to the success of ERP system implementation. Bose et al. (2008) investigate via a case study approach an ERP system and supply chain management (SCM) system integration project in a Chinese manufacturing company. The whole integration project requires ef?cient procurement and management of hardware, software, and human resources and aims at achieving a paperless environment with enhanced inventory tracking and picking. They ?nd from this case study that ERP and SCM systems integration is still a very new concept for many Chinese manufacturing companies. They ?nally discuss the solutions adopted by the case company to overcome many dif?culties throughout the system integration project. Recently, Ge and Vob (2009) provide an overview of ERP system related research and its implementation in China. They study cases where ERP implementations are employed for enhancing supply chain management. They ?nd that analytical data concepts, company culture and languages all play a signi?cant role in successful ERP system implementations in China. 2.4. Implementing fashion ERP systems In the fashion industry, ERP systems have been widely implemented. However, there are many unsuccessful cases and the ERP system implementation project is a big challenge to many fashion enterprises (see Hui et al., 2010 for some global cases). In the literature, the importance of ERP system for fashion companies has been explored. For example, Au and Ho (2002) conduct a review study on how ERP system enhances supply chain management. They explicitly comment that ERP system can support the fashion supply chains by allowing the implementation of e-commerce business models. For the bene?ts of implementing ERP systems for the fashion industry, Callaway (1999) discusses two dimensions: the strategic bene?ts and economic bene?ts. He further elaborates on the details of these two dimensions and propose the speci?c bene?ts from ERP systems implementation which include supply chain cost improvement, order management enhancement, ?nancial visibility and cash ?ow management. According to Hui et al. (2010), in the fashion ERP system, the following common modules are usually available: ?nance, sales and distribution, production planning and scheduling manufacturing and quality management, inventory management, global enterprise management, and customer relationship management. Among all these modules, the ?nance and purchasing related modules are

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especially important nowadays because of their impacts on the ?nancial health of the company. From the above literature review, it is well-noticed that most of the previous research focuses on identifying success and failure factors for ERP system implementation. However, few speci?cally focus on investigating how ERP system operates and streamlines the business processes speci?cally for the fashion enterprise operating in regions with Chinese cultural background (e.g. Wang and Chan, 2010). Furthermore, many fashion manufacturers are from China whereas Hong Kong itself is a cosmopolitan city with strong Chinese cultural background. Therefore the socio-cultural impact on ERP implementation in China-Hong Kong should not be neglected. As we will see in Section 3, the target company LSCO-CHK faces a lot of challenges in its operations in recent years and hence has to invest substantially in information systems. Since LSCO-CHK is an industrial leader and has a global presence, and it adopts an industrial giant SAP as its ERP system partner, exploring how this company adopts ERP system solution for its OTC business process will generate many important insights for this under-explored topic and can provide practical implications to other fashion enterprises in China and other parts of the world. Table 1 summarizes the most closely related literature and the literature positioning of this paper. 2.5. Model development Based on the above reviewed literature, we propose the following empirical research model which examines the anticipated bene?ts and critical success factors of implementing the fashion ERP system in China. Fig. 2 shows the complete research model, in which the bene?ts and critical success factors are all found based on the literature review we conducted above. In particular, we focus on

those factors related to China and the fashion industry together. With this model, we proceed to examine the real case on LSCO’s ERP system implementation.

3. Case study—Levi & Strauss Co 3.1. Methodology Case study research is an approach which ‘‘examines a phenomenon in its natural setting, employing multiple methods of data collection to gather information from one or a few entities (people, groups, or organizations)’’ (Benbasat et al., 1987). It is also one of the most popular qualitative approaches in the studies of information systems (e.g. Serafeimidis and Smithson, 2000; Motwani et al., 2002; Themistocleous et al., 2004; Yusuf et al., 2004; Xue et al., 2005; Avison and Malaurent, 2007). In this paper, we follow the relevant literature and employ a case study methodology, supplemented by the literature review, to derive insights and propose future research
Fashion ERP System in China

Benefits: Information availability Faster processing Uniform organization Quick customer responsiveness Better cash flow management

Critical Success Factors: Organization culture & policies Language & communication Legal &politic al issues Guanxi Management commitment Incentive Technical support

Fig. 2. The research model.

Table 1 A summary of the literature review on ERP implementation related literature and the literature positioning of this paper. Papers Approach Core CSFs identi?ed China speci?c? No No No No No No No No Fashion related? No No No No No No No No No No No No No No No

Soh et al. (2000) Umble et al. (2003) Yusuf et al. (2004) Rothenberger and Srite (2009) Motwani et al. (2002) Sun et al. (2005) Jones et al.(2006) Ke and Kwok (2008) Chang et al. (2008) Chen et al. (2009) Xue et al. (2005) Chien et al. (2007) Marbel and Lu (2007) Ge and Vob (2009) Avison and Malaurent (2007) Li et al. (2001) Hui et al. (2010) Wang and Chan (2010) Sun and Bhattacherjee (2011) Li (2012) This paper

Empirical—qualitative Case study Case study Empirical—qualitative Case study Empirical—simulation Case study Theoretical framework Empirical—quantitative Case study Case studies Empirical—quantitative Case study Review Case study

Cultural differences, organizational change management, education and training, planning Goal setting, top management commitment, organizational change management, data accuracy, education and training Data clean up, training, communication, Over customization Progressive implementation, training, communication people-related (e.g. education and training, skills development and knowledge management) Organizational culture, knowledge sharing Organizational culture, leadership

Social factors (e.g. senior management commitment, expectation and pressure from colleagues) No Communication, senior management commitment No Cultural differences, language aspect Yes Socio- and organizational culture (centripedal and centrifugal forces) Yes Cultural difference, language Yes Language, on-time communication between foreign vendors and local users, aligned accounting Yes report format Language, governance, political and legal issues Yes

Case study Case studies Case studies

A comprehensive review and analysis of MRP in China Yes Senior management commitment, clear goal setting, change management, equipment, pilot tests No Communication, mutual vision between ?rm and suppliers No Yes

No Yes Yes No

Empirical—quantitative User training, top management support and technical support

Empirical—quantitative The importance of leveraging enterprise IT through supply chain collaboration Case study and review Project management, changing mindset, providing good incentive, total commitment by senior management, formation of in-house expertise

Yes Yes

No Yes

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directions. To be speci?c, a single case study approach is taken. Under this approach, the critical point is not to over-claim any generalization of the results, but is to illustrate via a single case on how the research questions (as stated in Section 1) around ERP systems in China are addressed. As such, this research focuses on a single, in-depth case study, supplemented by the publicly available data (such as of?cial annual reports) on the case. The objective is to gain qualitative insights into the problem. For the primary data collection process, we employ multiple methods (Benbasat et al., 1987; Eisenhardt, 1989; McCutcheon and Meredith, 1993; Yin, 2009) which include face-toface semi-structured interviews with staff members from Levi Strauss & Co. in China-Hong Kong (LSCO-CHK), a review of the user manuals and technical documents for the new module adoption, publicly available news and statistics from the company’s website and annual reports. Additional discussions with several other staff members in LSCO-CHK are also conducted to learn some additional information. Notice that the materials from these multiple sources are used for triangulation purpose which helps enhance the reliability of the ?ndings (compared to the case analysis which solely relies on one single source of information, such as interview, which can be biased). (Yin, 2009). With the case study method de?ned, in this section we present the case ?ndings on implementation of an ERP module at LSCO-CHK. 3.2. Company overview Founded in 1953 by Bavarian immigrant Levi Strauss, Levi Strauss & Co. is one of the leading branded jeans wear companies in the world. Operated through the 3 brand names of Levi’s s, Dockers s and Levi Strauss Signature s, the company has a global presence in North America, Europe and Asia Paci?c Region. As of 2006, LSCO has more than 55,000 retail locations worldwide, including 138 company-owned stores and over 1100 franchised stores around the world. In particular, Levi’s is featured in top 100 brand list published by Business Week in 2006. With such large scale of worldwide presence, LSCO has her regional headquarters located at San Francisco, Brussels, and Singapore, altogether employ over 10,500 employees to oversee the operations (LSCO of?cial website). 3.3. Reasons for LSCO’s ERP system implementation Despite the strong brand images and global presence, the business performance was not satisfactory in the late 1990s for LSCO. Declined for the ?rst time in a decade, the sales of the company dropped by 4% from USD7.14 billion to USD6.9 billion in 1997. The situation was worse in 1998 that they recorded a further dip of sales by 13% to USD6 billion. In 2002, their sales fell to a 6 years’ low of USD4.1 billion (see Fig. 3). Whereas the global economic crisis in Asia and Brazil is accountable for the decrease of market demand, shrinking of market share to rival brands, such as Guess and Tommy Hil?ger, is the believed main reason of the
8.00

company’s drop in performance (Top 50 Software Scorecard, Apparel Special Report, 2007). In the light of this, LSCO has decided to plot for new strategies to regain the lost market share. Re-organization of their information systems infrastructure was a crucial step to cope with these new strategies as well as to streamline operations to increase the company’s effectiveness. a) Disparate information systems across regions: When the technology was not so advanced and international business was not so profound in the 1980s and 1990s, LSCO’s business units in different regions used different information systems for their operations. For instance, the computer systems used in the business units in Europe were Baan-based, whereas in Asia and Canada, a home-designed system of HP 3000s integrated with local Windows-based was adopted. Meanwhile, US of?ces used a mix of mainframes, Unix-based midtier and Windows servers (CIO, 2003). b) Business partner requirement: In 2002, LSCO decided to do business with Wal–Mart, the largest retailer in the world, to undertake the popularity of the latter. This partnership was attributed to the fact that the pro?ts of LSCO were decreased continuously and had been dropped to its lowest point. As LSCO realized that the distribution strategy did not suit the Wal–Mart business model and the company had a poor ontime delivery record which could not meet the requirement of Wal–Mart, LSCO re-formed and improved its supply chain management policy. Wal–Mart is a supply chain pioneer that moves products off its shelves faster than any retailer and expects replenishment on time to keep the costs low. That’s why LSCO had to improve its supply chain ef?ciency and accelerate the speed for products moved from warehouse to the retail shelf. The most challenging part of LSCO’s reform was changing from a national distribution system to a regional one, i.e. Wal–Mart’s distribution center in the US. In order to streamline the business process with Wal–Mart, LSCO has been planning to replace its existing information systems by a new ERP one, SAP. As a consequence of this partnership, supply chain transformation and implementation of information technology (ERP) of LSCO have been initiated since that time. As a remark, Li et al. (2008b) indicate in their study that there is a strong need for companies to comply with the standards of their customers or trading partners in terms of the adoption of enterprise systems. This actually shows that the powerful drivers of ERP system implementation in LSCO are their trading partners such as Wal–Mart. c) Keep pace with industry-wise practice: Seeing the need of agility to cope with the ever-changing market environment, many apparel retailers and manufacturers have been adopting or upgrading their information systems to a single integrated one, which included competitors of LSCO like VF Corp., Adidias, Nike, Reebok, Fornari, and Benneton. Rapidly losing market share to rivals, LSCO took to the installation of a global integrated system as a means that could support future growth and stay current with fashion trends in the industry. To sum up, the adoption of the company-wise ERP system is one of the crucial step as deemed by LSCO to increase her competitive advantage.

LSCO's Annual Net Sales Revenues: 1996 to 2002

US$ Billion

6.00

3.4. ERP and OTC implementation in LSCO In order to improve business ef?ciencies and to streamline the decision-making processes, LSCO decided to roll out an integrated enterprise resource planning system for ?nance and supply chain functions in the United States and Asia in 2003. And the company chose SAP as the ERP solutions provider. Headquartered in

4.00

1996

1997

1998

1999 Year

2000

2001

2002

Fig. 3. Annual net sales revenues of LSCO from 1996 to 2002.

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Fig. 4. User interface of the OTC Module of the SAP system.

Walldorf, Germany, SAP is one of the largest business software companies in the world. With more than 51,200 employees at sales and development locations in more than 50 countries worldwide, it is amongst the top 50 software vendors in the Software Scorecard survey conducted by the US magazine Apparel in 2007. In particular, it is perceived by the respondents as the best vendor in retail functional areas (Apparel’s Software Scorecard Card Survey, 2007). Moreover, the fact that many rivals of LSCO, such as VF Corp. (maker of Wrangler and Lee jeans), Adidas, Nike and Reebok are all SAP users may also contribute to the company’s choice of the software provider (CIO, 2003). However, shortly after the initial roll-out, in December 2003, the company decided to suspend inde?nitely installation of her worldwide ERP system ‘‘in order to reduce costs and prioritize work and resource use’’ (LSCO Annual Report 2004). With such sudden call-off, the company recorded a charge of approximately US$42.7 million in her 2004 annual report, which comprises approximately US$33.4 million for the write-off of capitalized project costs, and the remaining related to employee displacement, non-cancelable project contractual commitments and other restructuring costs. In August 2004, the company decided to implement a more focused ERP system on a staged basis around the world. The system mainly targeted on streamlining the order-to-cash management of the company, namely the SAP’s order-to-cash module, was to be launched in the Asia Paci?c region ?rst. The cash of US$34.7 million used by the company for investing activities in 2005 are primarily associated with the costs of such installation [LSCO annual Report (Form 10-K), 2006].

Design System

DaVinci SAP (ERP System)

Transactional System

Planning System

Manugistics

Data Warehouse

Reporting System

Fig. 5. Overall system architecture in LSCO-CHK.

up with the existing design system, Da Vinci (with which all the styles’ master information is handled), the data warehouse that helps with report generation, and the planning system Manugistics. For LSCO-CHK, the main function of the SAP’s ERP Solution is to automate and streamline the various activities related to orderto-cash management, which mainly focuses on the following four areas: (1) order to cash (OTC), i.e. sales order processing; (2) warehouse (and distribution centre (DC)) management (WM); (3) requisition to check (RTC); and (4) ?nance and controlling (FICO). In this case-study research, we focus on the OTC module (that copes with the various processes from sales ordering, stock allocation, delivery, to billing and payment) because this module is (i) crucial and speci?c for LSCO-CHK’s ERP system solution for its CHK market, (ii) under-explored in the literature. The processing overview of LSCO-CHK’s OTC module is depicted in Fig. 6.

3.4.1. Order-to-cash (OTC) module Amongst the various af?liates in the Asia Paci?c region, LSCO-CHK’s of?ce in Hong Kong is one of those candidates adopting the new module. In this section, we study the various processes involved in the new OTC Module adopted by LSCO-CHK. The user interface of the SAP system is depicted in Fig. 4. Fig. 5 depicts the company’s overall system architecture. The new SAP system is linked

3.4.2. New product classi?cation In order to better manage the merchandise to respond promptly to the changing demand, some new concepts on product classi?cation are introduced with the new OTC Module. Below are the two new main aspects.

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FI/AR Customer

limit for customers, identify ?nancial ability of customers, enable early warning signs for credit limit issues, and enhance credit related decision making. 3.4.4. Available to promise (ATP) checking After customers’ placing the orders, available to promise (ATP) will then be performed. This function allows the company to compare customer demand on the various MTD products to their respective stocks on-hand and stocks due-in, in order to promise the right stock quantity to customers. ATP also provides ongoing, immediate insight into areas of demand and supply mismatches. Any discrepancy can be corrected in advance. 3.4.5. Rescheduling After inputting all the concerned sales orders, the aggregated ‘‘actual’’ demand for individual products can be obtained. When the aggregated demand for a particular product is larger than the initial forecast, there may not be suf?cient stocks available to ful?ll all customers’ orders by their requested delivery times. Under such circumstance, LSCO has to determine which customer(s) have the higher priorities that their orders should be ful?lled ?rst. The new OTC module can help the company to reschedule the orders for this purpose. Essentially, the system sorts the concerned orders based on (i) order type, (ii) allocation priority, (iii) requested delivery date, (iv) order entry time, and (v) delivery priority. After that, ATP checking is performed again to recon?rm the ?nal quantity to be available. Then the sales team can revert to their customers about the con?rmed quantity and delivery schedule. 3.4.6. Allocation The order quantity and delivery schedule con?rmed during the rescheduling process are based on the orders agreed between LSCO and her various suppliers. Nevertheless, there may be deviations from the initial schedules, e.g. when there are quality issues or production/shipment delays. In light of this, after goods have been received and recorded in the warehouse, the company has to review the orders again and determine if any orders need to be revised before delivery. This process performed in the new system is called allocation run by which the stock will be distributed and assigned according to some prede?ned criteria, such as customer priority and requirement date. Afterwards, based on the prede?ned ?ll rate speci?ed by the company for the marketing strategic purpose, the quantity of products to be allocated to individual customers and that to be reserved for marketing plan are determined (see Fig. 8). This new approach of allocations facilitates the global inventory and materials requirement management of the company that stock should be allocated on customer priority and requirement date, rather than on a ?rst-come-?rst-serve basis. By doing so, LSCO can enhance her customer service as well as adhere to the prede?ned marketing strategies 3.4.7. Delivery, billing and payment After the allocation run, delivery is created via the background batch jobs in SAP. Once delivery has begun, orders cannot be cancelled. Before delivery, warehouse would follow the picking and packing instructions de?ned in SAP to prepare the goods for delivery. Next, it goes to post goods issue stage which means that the shipment of the products is marked. Also, the ownership of the goods is passed from the company to the customer. The last process of billing follows afterwards. 3.4.8. Summary One of the main objectives for LSCO-CHK to implement SAP’s ERP Solution is to automate and streamline the various business

Sales Order

Allocation Delivery Run

Post Goods Issue

Billing

ATP/ Rescheduling

Warehouse

Fig. 6. Overview of processes involved in SAP’s OTC module.

Fig. 7. Collection code de?nition.

a) Driver of replenishment: Merchandise in LSCO are classi?ed according to their respective drivers of replenishment. In LSCO, products are classi?ed as those with demand-drive replenishment (DDR) or those with market-trend-driven (MTD or nonDDR). To be speci?c, DDR products are those with stable and predictable demand. They are mainly ongoing core products or those with at least six months of sales history. On the contrary, MTD products are seasonal products with unpredictable demand forecast or products that are only procured upon receipt of orders. Under the new SAP system, the OTC module is con?gured in a way so that stocks are assumed to be always available for DDR products (core products). On the other hand, for MTD products, the system will check for availability before con?rming their orders. b) Collection codes (for order placing and shipping schedule): Owing to the marketing plans derived by the Brand Team, af?liates of LSCO have different order and shipping windows for a product so that the time to release to the respective markets can be monitored. To cope with this, collection codes are created in SAP system so that products attached to a certain collection codes are con?ned with speci?c shipment dates (see Fig. 7).

3.4.3. Sales order input After the line meeting, the Brand Team of LSCO will forecast the demand for the styles selected for the forthcoming season and proceed with procurement of merchandises in advance of receiving customers’ orders (6 months before the start of selling season). Meanwhile, customers, i.e. franchisees, send their purchase orders to their respective regional Sales Team approximately 4–6 months before the selling season, who input the order details into the new SAP module accordingly. Before doing so, each franchisee will be assigned as a unique ‘‘Customer’’ in SAP and thus a customer master is created in SAP. The purposes of this master data are for reporting, order placement, distribution and accounting. Within the customer master, a credit management module is also created. This module can minimize the credit risk by specifying a credit

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Orders Input SAP 1. 2. 3. 4. Orders are selected based on “Selection Criteria” Orders are sorted based on defined “Sorting criteria” Stock is allocated item by item Defined “Fill rate /Release criteria” is evaluated at item/order/group level. Output Delivery
Fig. 8. SAP allocation function.

re?ected that they did not have many prior opportunities to express their comments on the new system. b) Issue of information sharing: The warehouse information is not open to all the related parties. Only the logistics team can check the inventory status in the warehouse, whereas the retail store staff cannot do so. This gives rise to the dif?culty to enhance service level when stock-outs occur. This is because the retail staff cannot check if there are stocks available in the warehouse and arrange delivery accordingly. This issue may be largely attributed to the fact that not all related staff members and divisions were consulted for the detailed operation procedures to be monitored by the ERP system. c) Issue of stock replenishment: Since there is the issue of sharing information of the warehouse inventory, it is dif?cult for the retail staff to request replenishment immediately if they observe the possibility of stock-outs in the retail shops. Instead, the stock replenishment process is now initiated by the logistics department. Speci?cally, after the team has checked the availability of the stock, they will inform the sales department and in turn the retail level would decide which style to be replenished. The sales team phrases this approach as the so-called ‘‘passive replenishment’’ of the company. Despite the above, it seems that the company is positive to the new system adoption. The main advantage of implementing this system is to achieve the control objective of the headquarters. The Asian regional head of?ce can check for every information detail of each individual regional of?ce. The new system can also assist the head of?ce in planning and controlling. The fact that the company’s sales performance in the region continues to grow after the new system implementation also re?ects the effectiveness of the system to a certain extent (see Fig. 9). 3.5.1. Post-implementation notes: updates of LSCO’s ERP projects based on its ?nancial reports In 2007, LSCO has its operations in 12 countries across Asia Paci?c regions implementing SAP, and LSCO has continued to upgrade this global system to make the company more productive, eliminate unnecessary work and reduce complexity (LSCO’s 2007 ?nancial report). Because of the LSCO’s system shut-down problem in April 2008, it brought a substantial impact on the company’s 2nd quarter pro?t. LSCO then quickly ?xed the problem and eventually could meet the customer demand. After that, the company had successfully implemented the rollout of ERP system in Asia Paci?c and then launched the system in the US. However, counter-intuitively, LSCO has found it more dif?cult and also more costly than the company had expected for its system implementation process in the US than in China - Hong Kong. The company then appointed an ERP system specialist to optimize the US ERP system in 2008. Such move is deemed useful as in the 3rd and 4th quarters of 2008; the US region of the
1,000

functions to improve the ef?ciency of her order-to-cash management, with the special relevance to many manufacturing partners in China. From the above outline of the various OTC processes, it is believed that the following merits can be achieved if the system is operating correctly as intended: (a) Prompt information available: The new OTC Module can provide ongoing, immediate insight into areas of demand and supply mismatches, as well as exception reporting, so that the concerned parties can react promptly for additional order placing and/or other remedial actions. (b) Faster processing time and fewer human errors: Since many OTC processes are automated under the new OTC Module according to prede?ned rules, it can reduce human dependency and in turn speed up the ful?llment process. Besides, the ruledriven algorithm also increases clarity and transparency of the various processes and signi?cantly reduces human errors. (c) Adherence to corporate strategy: The new module can accommodate to different supply situations according to the prede?ned rules. As a result, in case of supply discrepancy from originally planned, the various OTC processes can still be proceeded to abide by the company’s prede?ned strategy. (d) Capture of true demand: Under the new OTC module, all orders are input into the new module regardless whether these orders for products are available or not at the moment. Thus the true demand can be captured. Besides, by analyzing the outstanding orders, better forecast can be performed in the future.

LSCO Annual Net Sales Revenue - Asia Pacific

3.5. Outcomes of ERP and OTC implementation a) Problem of ?le compatibility: After implementation, it was found that the ?les stored in the old system cannot be read by the new one. Therefore, staff members have to re-organize the existing data ?le in order to suit the new system and such action is time consuming. Notice that this ?nding is consistent with Soh et al. (2000), which states that data standardization and adoption would cause ERP system failure due to the challenges associated with cross-module integration. Another reason accounting for this problem may be related to insuf?cient testing by operational staff, as many operational staff
US$ Million

800 600 400 200 -

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Year

Fig. 9. Annual net sales revenue of LSCO—Asia Paci?c Region from 1998 to 2007.

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company had reported sales growth (LSCO’s 2008 ?nancial report). In 2010, the company laid the groundwork for the SAP rollout in Europe in 2011 (LSCO’s 2009 ?nancial report). Recently, the company has been upgrading her system to the latest SAP BusinessObjects GRC solutions, version 10.0, in 2011, which aims to further improve the company’s ef?ciency and productivity. LSCO is also one of the ?rst adopters of this latest version. One of the merits of this new version is that it shortens the time to bring a new user onto the system, from 14 days to 1.42 days on average and nearly 65% of new users can grant access in less than a day. This upgrade also allows LSCO to achieve higher level of control, conduct better risk analysis and remediation, and ensure compliance to its management goal. Allowing the business to migrate to a single instance of SAP BusinessObject Access Control is another major bene?t of this system upgrade in 2011. As in Asia, the company ran two separate instances of the application to accommodate the different rule sets and business processes throughout different company’s units. This version allows the company to do more of its own updates and customizations. During the U.S. implementation, LSCO customized the rule set basing on their global ?nance policy and operational risks (www. insiderpro?les.wispubs.com, 2011). According to her 2010 ?nancial report, LSCO has continued to invest in the IT system and the company is on track in 2011 to rollout the ERP system in Europe.

4. Critical success factors for implementing fashion ERP systems in China Motivated by the case on LSCO-CHK and inspired by the reviewed literature, some factors are observed that may lead to successful ERP system implementation and we discuss them as follows. (a) Changing mindset and ?ne-tuning cultural norms In the literature, we have full evidence to understand that the ERP system implementation in China maybe especially challenging because this ‘‘system concept’’ comes from the Western world which has totally different cultural, social, and behavioral mindsets. For example, in Chinese fashion companies, guanxi rules the game and all kinds of supply chain relationships are driven by guanxi. This is the case even for American and European brands operating their of?ces in China (which includes LSCO-CHK). As a result, the use of system mindset to ensure every procedure is well-de?ned and crystal clear is inherently different from the business culture and ‘‘rule’’ in the Chinese world. It directly leads to all kinds of operational problems. It even directly leads to the failure of many ERP system implementation projects (see Ge and Vob, 2009). In fact, most recently, Luo et al. (2012) study how information technology affects fashion ?rms’ organizational capabilities such as operational capability, and ability to innovate. They focus on the American fashion industry and employ publicly available ?nancial data to conduct analysis. They provide evidence to support that information technology can lead to a higher level of organizational capabilities. They further reveal that ?nancial resources are important in affecting the relationship between information technology and operational ef?ciency. There is no doubt that the fashion companies operating in China (especially the local Chinese brands) usually have enough resources (which directly means investment to ERP system implementation is feasible). However, even though Luo et al. (2012) ?nd that the information technology can bring in improvement of organizational capabilities as evidenced in the American fashion industry, we believe that the situation cannot be directly applicable to China unless the mindset and cultural norms are well-respected.

The above ?ndings have two critical new implications on the use of technological information systems solutions such as ERP systems in China: (i) Employing systems mindset with the use of technological solutions requires very careful planning because the industrial norms in China are hugely manual based and there are many ad hoc and non-systematic decision making mechanisms. (ii) Guanxi is crucial for the success of Chinese companies and it is important to consider it even when the business processes are mainly supported by information systems. As a result, more ?exibility with ‘‘human decisions’’ is critical to ensure success in using technological solutions for companies operating in China. It is also interesting to note from our case study that a careful ‘‘stage by stage’’ transition of systems implementation, together with the consideration of Chinese norms and business culture (including quanxi) can lead to very promising result in China. Surprisingly, implementing systems in China can be even more successful than implementing similar systems in North America (as in the LSCO case we discussed) because once the most critical elements in Chinese business culture and norm are respected, the well-cultivated ‘‘cooperative merits’’ of Chinese people will help smoothen the transition and hence the chance of success of implementation is much enhanced. (b) Providing good incentive As shown in LSCO-CHK’s case, if the Chinese workers using the new system are not granted any strong incentive to cooperate and their concerns are not well-addressed, they may decline to work hard. In fact, it is well-known that ERP system implementation is associated with a natural obstacle which comes from staff members (in both western and eastern worlds). To be speci?c, there virtually always exists user resistance in a change of the use of information system in the company. This issue is especially prominent in ERP system implementation because the change is huge and the related business process re-engineering usually leads to a higher degree of automation and hence downsizing of the manpower. As a result, users may intentionally refuse to ¨ve, and even proactively damage the cooperate, pretend to be na? project by spreading bad news (see Laudon and Laudon, 2012). This case is even more serious in China because Chinese workers have the tendency of forming group decision making when they feel their basic values and rights are being attacked by outsiders (Shenkar and Glinows, 1994). This is also in?uenced by the mainstream political norms of the nation. As a result, consistent with our arguments made earlier, we suggest the fashion enterprise which wishes to implement ERP system successfully in China ?rst respect the culture, value and norms of Chinese workers. Providing attractive incentives to them can be one good means. These incentives can take the form of, e.g. cash prize and promotion opportunity, but should include one basic form on ‘‘respect’’ (because Chinese people tend to treasure ‘‘respect’’ a lot). These incentives should also directly relate to (i) the smooth transition from the old platform to the new ERP system, and (ii) the proper operations of the new ERP system. Nike’s ‘‘super user’’ model implemented in Hong Kong, as a part of its global NSC (Nike Supply Chain) project, provides selected staff members extensive training in its US headquarters. These selected staff all feel being super-respected and have very high esteem. After the training, these well-trained members become honored and promoted as ‘‘super-users’’ and act as trainers for others themselves when they return to Hong Kong. This system is proven to be helpful to the smooth transition of the ERP system implementation in Nike.1

1 We thank a former senior manager of Nike Hong Kong for sharing with us this NSC super user model.

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(c) Con?ned scope of the ERP system project and roll-out in transition The original ERP system implementation plan for LSCO was a global one with a larger scope to integrate the different legacy systems into a single one. Owing to the enormous expenses for the installation and the continuously declining sales performance at that time, the company had called off the project less than a year after its roll-out. After detailed review and study, the company took up the system implementation project again but this time on a staged basis. The objective of the project was revised to be focused on streamlining the order-to-cash management. Besides, the roll-out was scheduled by region, ?rst with Asia Paci?c region, followed by the US and Europe later on. By con?ning the scope of the ERP system project, more resources can be allocated for better implementation of the system. Besides, it can also reduce the possible impacts to the overall operations in case of implementation failure or disruption. Furthermore, the successful implementation of the focused system would provide a solid cornerstone for system implementation of other functional areas as well as for future upgrade. Notice that this critical success factor is consistent with some prior studies, such as Wang et al. (2005). (d) Total commitment from both senior management and operational staff members The below suggestions focus on people aspects, which are consistent with several previous studies such as Sun et al. (2005) and Wang et al. (2011). (i) Management commitment The importance of commitment by management is argued to be critical in ERP implementation project in China (Wang et al., 2005; Sun and Bhattacherjee, 2011). In LSCO, though once suspending the global ERP system project due to the huge investment and adverse business environment, the company’s management was well aware of the importance of continued improvement in her operations across her global businesses. After re?ning the scope of the project, LSCO picked up the ERP system implementation plan again. It conveyed a clear message to both her employees and her business partners that the company was devoted to improvement in her information technology for better business performance. (ii) Staff commitment Implementing a new system could de?nitely affect the whole organization. As stated in the previous section, the new system affects the daily works of many staff members as they have to spend more time to amend the existing ?les and this may lead to some con?icts between the staff and the company. It would be better if LSCO could invite the staff members to share their opinions towards the use of the new system and collate their information for the future development of the system. (iii) Formation of in-house IT expertise Adopting a new ERP system from scratch to replace existing legacy systems, LSCO sees the needs to assemble a team of in-house IT professionals for support and maintenance in the future as the system requires continuously working and improvement over time (Sun et al., 2005). As a result, the Global SAP Competency Centre was set up to provide SAP solutions and associated services to the company’s business units worldwide. Under the SAP Competency Centre, Order to Cash (OTC) Teams were formed at individual regional af?liates which are recruited with experienced SAP professionals to look after the development, implementation, maintenance and support of the various OTC functionalities. With the in-house IT professionals, system problems and users enquiries can be handled in a prompt manner.

5. Conclusion, insights and future research opportunities Through the study of the LSCO-CHK case and the reviewed literature, we have demonstrated how ERP system can improve business performance and how new system adoption brings different impacts to the company operating in China. Speci?c critical successful factors for the case in China are also summarized. As a remark, although there are some concerns from the employees in LSCO regarding the ERP system implementation, the use of information technology in the marketplace and the improvement of supply chain management are the dominant trend. Implementation of a new system requires commitments from the staff at all levels and it is a long-run project, companies should carefully carry out the implementation plan and ensure that the new system can be operated by the users smoothly. In turn, the proper way of the use of information system would bring numerous bene?ts to the company. To conclude this paper, we provide concise answers to the ?ve core research questions we raised in Section 1. (1) The literature advancement on the implementation and applications of fashion ERP systems in China: From the reviewed literature, we notice that the fashion ERP systems developments and deployments in China have yielded the following bene?ts: (i) Information availability, (ii) faster processing, (iii) uniform organization, (iv) quicker customer responsiveness, and (v) better cash ?ow management. From the case study on LSCO, we observe that these bene?ts are all related to the intended objectives in the company’s ERP system project (especially the OTC module), and LSCO has partially ful?lled them. In terms of the success factors, the literature has indicated that: (i) organization culture and policies, (ii) language and communication, (iii) legal and political issues, (iv) guanxi, (v) management commitment, (vi) good incentive, and (vii) technical support are all critical. (2) The possible issues that a fashion company may encounter during ERP system implementation in China: From the LSCO case, we reveal that the possible issues and challenges a fashion company will face in its ERP system implementation in China are: (i) File compatibility problem, (ii) failure in having seamless information sharing of all teams, and (iii) problem with stock replenishment. To a large extent, these challenges come from insuf?cient technical support and infrastructure prior to implementation (see Li et al., 2008b for many insightful discussions). (3) The factors that may lead to successful ERP system implementation for a fashion company in China: As shown in the LSCO case, we reveal that understanding the organization culture and policies, establishing proper guanxi, providing appropriate and good incentive, and offering suf?cient technical support are all the critical success factors for a fashion company’s ERP system implementation in China. (4) The strategies that can be taken by a fashion company to improve its production and operations management in China via ERP systems: As re?ected by the LSCO case, we understand that for a fashion company to enhance its operations in China via employing ERP system, it has to pay full attention to a few areas, namely: (i) Both the company senior management and the staff members have to adopt a new ‘‘system’’ mindset and ?ne-tune the company’s norms, (ii) the company must offer good incentive (linked closely with the use of ERP system) to the staff members so that they will faithfully use the new system to enhance company’s business operations, (iii) the scope of the ERP system project should be con?ned and roll-out in transition, and (iv) total commitment from both senior management and operational staff members.

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(5) For the challenges and future research directions for fashion ERP system implementation in China: Based on this case discussion and the ?ndings of the literature, the following challenges and future research opportunities are identi?ed. a. How ERP system in?uences the ?nancial and cash ?ow management in fashion enterprises in China? As reviewed in Section 2, ?nancial and cash ?ow management is an essentially important part of modern ERP system for fashion enterprises in China. This issue is particularly important because the Chinese ?nancial system is not totally free (the Chinese ?nancial market is not a completely free market). As a result, cash ?ow management is crucial for the success and survival of the fashion companies operating in China. Thus, there is a genuine need to examine further how ERP system would in?uence the ?nancial and cash ?ow management in fashion enterprises especially in China. Many insights can be generated. b. Exploring how ?rm size and resources of fashion enterprises affect the ERP system implementation in China It is known that ERP system implementation requires substantial investment. This is especially a signi?cant issue for fashion companies because most of them (excluding the luxury fashion brands) are not as wealthy as ?nancial banks or the consumer electronics brands. As a result, how the ?rm size and available resources affect ERP system implementation for fashion enterprises in China is an interesting and important topic. Expectedly, innovative measures such as co-implementation and development on ERP systems of horizontal small-to-medium sized ?rms could be an alternative if resources of individual ?rms are limited. c. Investigating how ERP system implementation enhances supply chain strategic alliance measures in the fashion industry in China In fashion supply chains, many kinds of strategic alliance measures can be found. For example, the renowned vendormanaged-inventory (VMI) scheme is successfully established between the American buyer JC Penney and the Chinese manufacturer TAL. Similar schemes can be observed in many other fashion brands. Expectedly, the success of these strategic alliance schemes would relate to the ERP system implementation. It is thus natural and important to study how the two are related. d. The use of business intelligence in Chinese fashion ERP system ERP system enhances the integration of operations and business processes both internally and externally. There are hence more opportunities to adopt a higher level of technologies in improving business decision making. Recently, the use of arti?cial intelligence methods is popularly studied in the literature under the scope of business intelligence and business analytics (Laudon and Laudon, 2012). As a result, how the Chinese fashion ERP system can be supported by these business intelligence applications is an interesting area for further examination. Moreover, since many modern fashion business practices, such as mass customization, require very ef?cient supply chain process control and accurate forecasting, the ERP system which equips with these business intelligence tools will de?nitely help a lot for the success of these modern business models in fashion. e. Studying whether the censoring issue of network affects the performance of ERP system in China In China, the internet is under the government’s censoring. It affects every walk of life and also includes fashion enterprises. One China speci?c research issue hence arises: How this kind of information censoring affects the development and operations of ERP system for fashion enterprises in China. Expectedly, this research extension will identify whether ERP system has its natural limitation in China owing to the information censoring issue. As a consequence, some areas of potential improvement speci?c to fashion enterprises operations related to the use of ERP system in China can be revealed.

As a remark, it is well-noted that some China’s manufacturing sectors, including the fashion and apparel sector, have been very successful and growing at a much faster speed than many places in the world such as the US. We argue that in terms of the fashion ERP system implementation, a fashion company can enjoy a bigger success in China than other places if: (i) it understands the importance of respecting the ‘‘human mindset’’ of Chinese society and shows full respect to the staff members during the implementation process, (ii) it emphasizes the importance of guanxi with both internal staff members and external business partners, (iii) it provides attractive incentives, both tangible (such as cash) and intangible (such as respect and recognition) to the participants. Our analysis indicates that if the above measures are well-taken, implementing technological information systems solutions in China can be more successful than the ones in the western countries because of the Chinese cultural merit treasuring ‘‘cooperation’’ when Chinese people feel respected. We hence argue that companies who wish to increase the chance of success in implementing technological solutions to enhance production and operations management in China must take these speci?c measures into considerations.

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