Goodlass uses IT to “color up your life”

The Indian paint industry is a picture of contrasts. On the one hand, it caters to the industrial paints market with large vendors like Telco or Toyota who require zillions of litres to wrap their cars in beautiful colours. On the retail side is the decorative paints segment, where customers demand unique colours to dress up their homes. To succeed in taking care of such diverse markets, paint majors are relying on information technology. Srikanth R P looks at Goodlass Nerolac, one of the most innovative users of IT in the Indian scenario and tells us how this giant has leveraged IT for competitive advantage

Data-warehousing gives an insight into product positioning as well as indications on which markets to target, says Jason Gonsalves

The IT set up in Goodlass Nerolac has been in operation for three-and-a-half decades and can be divided into four distinct phases. The first phase was the era of the punch card system when the entire transactions were captured on punch cards. The second phase saw partial computerisation of depots and factories. The third phase that began in 1990 was the most important and saw the organisation making a renewed thrust on IT. This was the phase when the company took a policy decision to computerise all depots, factories and functions supporting the business. This phase saw the automation of all depots, factories and regional distribution centres covering various operational facets like sales and order processing, warehousing and distribution, inventory control, financial accounting and purchase order generation. Additionally, in this phase, local centres were computerised and this enabled data entry at the regional source. To maintain uniformity, data reporting formats were standardised. As technologies like LAN, WAN and e-mail were embraced by the organisation, old systems like memos and typewriters were replaced with e-mails and PCs.

Having realised the strategic advantage of IT, the management decided to form a core team that would give the organisation direction on the deployment of information technology. With a massive scale of operations covering around seven manufacturing units, 63 sales offices, around 11,500 dealers and over 2,000 SKU (stock keeping units)—managing inventory levels and data from all sources was a massive task. Further, the organisation had a transaction-based legacy system with a server located in each region. The data was captured on different servers and then manually consolidated at a central location. As data was not collated at a single location for analysis, business users could not use the consolidated data. The management was clearly looking at a situation where there were vast islands of information that were leading to a delay in taking timely decisions. It is then that the management decided to go in for an ERP system. After screening a variety of packages, the company zeroed in on SAP R/3.

The organisation also took a major policy decision to empower the functional user to run day-to-day functions on the application software instead of depending on the IT department. For example, while IT was acting as an enabler, it also became a bottleneck as loads of queries piled up with the IT department. The ownership of some systems which were confined to the IT department were now handed over to business professionals so that they could use the system and get the required information they needed by just firing a simple query. Further, they could even suggest changes to the system wherever necessary. IT from being seen as a separate department was now a service provider. This was a sharp departure from previous practices where responsibility of a functional user never went beyond specifying requirements and then the IT department would convert those requirements to systems/programs and implement the same.

At the same time, the organisation also decided to implement a datawarehousing solution. To select a datawarehousing solution, the company evaluated six packages, shortlisting three. Prototype applications were developed for all three packages. Finally, the company selected the SAP suite of datawarehousing tools as it provided facilities for multi-dimensional analysis of data and allowed for import of data from all platforms. However, implementing a SAP solution and integrating it with datawarehousing tools was not exactly an easy thing to do and the company had its share of challenges. The first step was the implementation of the datawarehousing project at the corporate office using legacy application data for sales and marketing. For a start, the clean up of the legacy data, especially master data, had to be done. This was the toughest phase. The next step was the integration of sales and marketing data with SAP R/3 data. This data was imported by writing a program in the ABAP language of SAP. After this process, the mapping of SAP data fields was undertaken. Here the company required the help of functional experts for the mapping exercise.

The third step was the integration of the data mining solution from SAS with SAP R/3 data. Here the selection of SAS proved to be an advantage as by using this solution, SAP data could be directly fetched without writing a single line of code. The only effort was in the mapping of fields and validation of SAP data, imported directly into SAS. This phase also saw the datawarehousing being extended to all functional areas, which meant integration with relevant SAP modules. The final step was Web-enabling the sales and marketing data, which would give remote users the power to carry out analysis. At the same time, on the networking front, efforts were directed towards making usage more secure. This step also saw a firewall being installed to authenticate all users.

Benefits ERP

Apart from the fact that data now is pooled in a central server that helps in analysing data quickly and predicting trends, there have been other major benefits. Explains Jason Gonsalves, senior manager of IT at Goodlass Nerolac, "The ERP system has brought about a positive change in almost every department. For example, the ERP system has resulted in better collection efficiency. Today, one cannot make a sale unless a collection is done as every transaction is cross-checked by the system. Internal efficiencies have increased and bad debts have come down. The system has even brought down the finished goods stock. We can even analyse which batch in the system has not been sold. In summary, the quality of work has gone up without an increase in manpower."

Datawarehousing

The sales and marketing team extensively used datawarehousing tools to study trends of products, shades, markets and customers across different geographies. The investment made in datawarehousing tools paid off for Goodlass Nerolac when it was able to pinpoint the trends in the market and identify potential geographies during the launch of its product, AllScapes. When the product was first launched in the market, the response was not exactly enthusiastic. While the marketing team tried to gauge the market response from different geographies, the amount of data generated was too complex to analyse and take a decision.

But now, armed with datawarehousing tools, the company was able to exactly pinpoint problem areas and adjust supplies to the dealer network in such a way that the paints were stocked where more sales were taking place. During this evaluation, the company also realised that manufacturing only the base (white) and then performing the shade matching would make the process more efficient. Accordingly, AllScapes was relaunched with only 38 shades. If the customer wanted more choices, he could simply walk up to the counter where the base would be mixed appropriately with Nerolac Hi-Power Universal stainers to obtain his choice of colours. The shift to tinting machines meant that inventory levels fell drastically. This naturally led to faster movement of goods across the supply chain.

Explains Gonsalves, "Due to datawarehousing tools, we got insights into the positioning of the product as well as indications on which markets to target. The result was that the product has enjoyed a good launch and has sold more in a shorter timeframe as compared to its earlier performance."

Sales and marketing are not the only departments using this tool. The purchase department uses datawarehousing tools to improve performance of vendors. The manufacturing department uses them to improve cycle times, standardise production across factories, work on quality parameters and improve capacity monitoring and utilisation. All these initiatives required a lot of effort especially in configuring and customisation over a period of two years. But all the effort has paid off handsomely. Another credit to the IT team at Goodlass Nerolac is the fact that this installation is probably the biggest datawarehouse of SAS fully integrated with SAP R/3 in the country, in the manufacturing segment.

Knowledge Management

Having implemented basic systems for collecting transaction based data, the company started looking at implementing systems which could capture even non-transaction data. Explains Gonsalves, "We began an implementation process of knowledge management as we wanted to tap the expertise and knowledge within the organisation. Additionally, implementing knowledge management could give us the rationale behind various decisions even if a person had left the organisation. In essence, we see knowledge management as a key contributor to employee productivity."

After ensuring that the ERP system and the datawarehousing tools were fine-tuned to perfection, Goodlass Nerolac saw the need for supply chain optimisation. Accordingly, after studying various packages, the company selected APO from SAP. The supply chain management solution is scheduled to go live within the next one month. Adds Gonsalves, "In an industry where preferred shades keep on changing, it is difficult to estimate the demand across nearly 15,000 dealers. Further, raw materials that go into industrial paints are extremely costly as they are imported, making forecasting of demand very difficult. In some cases, the raw material that is imported goes into the creation of a single paint. This is the reason that every batch is a challenge to make. Further, shade passing at the customer’s end is critical and we need a system, which would help us respond to changes very fast. An optimised supply chain gives us the ability to deliver the right product at the right price. It would also help us in improving our forecasting efficiency and facilitate production on the shop floor."

Outsourcing

Goodlass Nerolac has also outsourced some services like facilities management at the corporate headquarters, annual maintenance for all the infrastructure facilities and firewall management. Gonsalves believes that the need for outsourcing services is predominantly due to the fact that in an ever changing technology landscape, the concept of managed services is important as the organisation is kept aware of all the relevant technology options and how they can be best applied to the organisation.

Says he, "IT assets have a life cycle. The life cycle typically commences from the time an order is placed for it to the time the organisation decides to retire the asset. For a manufacturing and distribution organisation, at a time when IT is becoming more business centric, more time is spent developing the competence to complement business needs with software or communication capabilities. At the same time, there is also a need to manage an organisation’s IT assets in a systematic manner so that they perform when needed and in the manner expected so as to avoid any surprises. This is the reason why we have decided consciously to work with our vendors for technology sustenance rather than the organisation investing in developing the required skills. The rationale is that since this is the core area of operation, a vendor is more likely to invest in the required skills and systems more and thus be able to offer more to Goodlass Nerolac rather than if the company invested in them itself."

Apart from ERP and datawarehousing tools which have helped in improving the efficiency and productivity levels of Goodlass Nerolac, the speed of the organisation in reacting to events has increased rapidly. For example, if the organisation launches a regional scheme or contest, the subsequent sales figures can be immediately known to a
sales or marketing person. Accordingly, the company can then decide on future schemes to be launched and trends can be tracked regionally. To conclude, one can say that the success of Goodlass Nerolac in using information technology is a perfect example of how an organisation can use the power of information technology not only as an enabler but as a strategic and competitive advantage.