Tata Ryerson upgrades SAP to handle growth

Upgrading its SAP setup helped Tata Ryerson improve its production cycles and streamline transaction processing, finds Abhinav Singh

Tata Ryerson is a 50:50 joint venture between Tata Steel and Ryerson Tull of the US which manufactures hot and cold-rolled coils, strips, plates, sheets and blanks. The company is headquartered in Kolkata with manufacturing facilities at Jamshedpur and Pune, and more are planned in northern and southern India. Tata Ryerson has distribution points at Howrah, Pune, Jamshedpur, Faridabad, Chennai, Raipur and Bangalore and proposes to open fifty new sales offices by 2006.

The company has been leveraging the power of SAP’s ERP package ever since commencing operations in 1997. SAP provides inventory and stockyard management, small lot deliveries and just-in-time supplies. Being in an unorganised sector, the only way for it to differentiate itself was through product and service quality. As the various units across the country were not integrated, lack of real-time information resulted in inefficient management of working capital.

Tata Ryerson has upgraded its ERP package twice over the past seven years. This has helped the company meet its business requirements, which grew rapidly from Rs 10 crore in 1999 to Rs 335 crore in 2004. Its transactions have also doubled during the last two years.

SAP: The package of choice

The R/3 3.0F version was a clear winner during the evaluation exercise which Tata Ryerson undertook before its ERP implementation in 1997. The core package had sales and distribution, materials management, finance, production planning and application link enabling modules. C S Murty, chief of information management, Tata Ryerson, says, “We were inspired by the success of SAP’s ERP package at Ryerson’s Mexican plant. They had experienced a speedy implementation and were given excellent support by SAP; and as there are many users of SAP’s ERP system, there were no bugs. Moreover, we found that the queries, reports and graphical presentation of data are well developed in the package.”

The need for localisation

Tata Ryerson upgraded from SAP’s ERP package version R/3 3.0F to R/3 4.0B in 1999. Murty explains, “R/3 3.0F did not offer us localisation such as excise reporting and enhanced sales tax features suited to the Indian market. The R/3 4.0B version proved a perfect fit in this case.” Tata Ryerson also planned to integrate its ERP package with Tata Steel’s SAP system and the R/3 4.0B version helped integrate the two smoothly.

Evident results

Tata Ryerson adds substantial value to the material supplied by Tata Steel before it is dispatched to the customer. The R/3 4.0B version helped share all the information about the material and customers online. For instance, the credit control limits of different customers could be checked before material was dispatched. The feature of the R/3 4.0B version enabling application links facilitated the sharing of all documents from Tata Steel’s SAP system which accompany the material when it is shipped.

Enterprise upgrade

Tata Ryerson was doubtful about continuing with the R/3 4.0B version for which product support was no longer available. In addition, its transaction volumes were doubling year-on-year. This compelled them to adopt the enterprise version of ERP-the R/3 4.7 version. Murty says, “The support cycle of the SAP’s R/3 4.0B had concluded. We had an option of continuing with the same version but decided to go in for the enterprise version, as we did not want to take the risk. SAP was non-committal about providing us with a patch. Moreover, as our volumes had increased tremendously we needed to increase our capacities and were in the process of changing our complete hardware infrastructure. The enterprise version became necessary as it can handle large-scale transactions.”

Handling the black-out

Before going live with the R/3 4.7 version, the entire application and developmental server had to be shut down for 48 hours. Murty explains, “During the black-out stage, the ERP system shuts off for not less than 48 hours. During this period it is necessary for the company to ensure that the system is up and running and is not affecting the business.” To handle the black-out period Tata Ryerson had liaised in advance with its customers and hence was able to handle the situation without any adverse impact on its business.

Business gains

SAP caters to all business processes at Tata Ryerson. The quantitative goals of the company were achieved, with increased efficiency of business processes, improved productivity, reduced costs, optimised workflow and reduction in errors. With the availability of real-time information, transaction speed was accelerated manifold. As all the information was available online, customers could query the quantity of material available at a particular time and plan their production and scheduling flexibly. The implementation also made it possible for the company to change its production cycle as per customer requirements at any given time, altering its own production to suit their needs. This translates into improved customer service and quality control.

Future rollouts

Tata Ryerson has opened ten offices across the country which it wants to bring into the ERP system. The company considers that the enterprise version is best suited for this purpose. It also intends to implement the human resources (HR) and payroll modules of the ERP package. Tata Ryerson is also exploring the possibility of rolling out CRM and SCM packages soon and this will be easier with the enterprise version of SAP’s ERP package. Murty says, “We are in the process of identifying a partner who can customise the payroll and the HR features on version R/3 4.7. In case value added tax (VAT) comes into the picture, this version is VAT-enabled and we would need to make only minor changes to the existing excise module.”

abhinav@expresscomputeronline.com