Case Study Of Execution Of LX Company's Supply Chain IT System's Integration

The enterprise mergers and acquisitions is becoming a hot topic in China even all over the world. The success of mergers and acquisitions depends on the post-merge integration to some extent. The execution force plays an important role the process of integration.As we all know, the mergers and acquisitions is a difficult thing, while the integration is more difficult than that. In Dec of 2004, LX Company announced the deal of merge PCG Company with 1.25 billions dollars. Then, the integration became a big challenge that LX had to face. The integration of organization, integration of culture, integration of business process, integration of IT system, integration of human resource etc, all these issues were to be solved by LX Company.The integration of supply chain IT system was looked as the most difficult one of all integration activities. The project of integration of supply chain IT system included six phases: evaluation phase, preparation phase, blueprint phase, realization phase, final preparation phase, post-production supporting phase. That integration activity was managed by way of project management.This article analyzed the process of the integration of supply chain IT system. Three issues that may jeopardize the execution force were found out. The first issue is the communication barrier caused by corporate culture conflict. The culture conflict is an outstanding issue for cross-border mergers acquisitions. So it is the same for LX Company merge PCG Company. PCG had a 70 years older history than LX. On the one hand, the culture conflict represent as the culture conflict between LX and PCG, on the other hand, it represent as the culture conflict between western culture and eastern culture. The second issue is the complexity of integration project. The project involved so many function areas, so many people, so many IT systems, and so many integration steps. In addition, the time limitation is so tough. The third issue is that the PCG's original culture is bureaucratic and low efficiency. They don't like any change, so they have no willingness to the integration activities, which means change for all people. The above three issues depress the execution force of integration of supply chain IT system.In order to solve above issues, LX Company took several actions to enhance the execution force. First of all, LX dedicated to remove communication barrier. It established new core personal value by culture integration. LX also published its new corporate culture to internal and external customers. LX Company set up many kinds of channel for open communication. LX Company also defined rules of cross-culture communication. Secondly, the use of project management tool enhanced the execution force. The project communication plan, project review and control plan, project risk management and project lesson learning management etc, these tools were useful. Thirdly, LX Company set up new performance management system. It is a key performance indicator (KPI) driven performance system, align employee target with the strategy target of the company. About the employee performance, the P3 performance management system associated employee's bonus with his own performance result and company's business performance. These actions enhanced the execution force of integration of supply chain IT system.