ERP brings visibility into Madras Cements’ business

Ramco’s e.Applications (ERP) helped Madras Cements streamline its information flow. It has resulted in efficient capacity planning and utilisation and helped eliminate wastage, says Abhinav Singh

Madras Cements (MCL) manufactures cement and is known in the market as Ramco Cements. It is the flagship company of the Ramco Group. The company started its first manufacturing plant with 200 TPD (tonnes per day) capacity in 1962. Today with a combined capacity of 6 million tons, MCL is one of the largest manufacturers of Portland cement (special cement variant) in India. The Ramco group operates in business areas such as textiles, cement, software, surgical equipment and biotech. MCL has manufacturing facilities at Alathiyur, Jayanthipuram and RR Nagar.

Demand for cement is closely related to growth in the construction business. Power, coal, grade of limestone and freight are components in manufacturing cement. The challenge for any cement manufacturer is to ensure a low cost structure to be competitive and profitable in the market. MCL had some peculiar problems as it had fragmented systems running at each of its manufacturing units that led to problems in capacity planning. The utilisation rate was poor and decision making was not accurate leading to wastage.

No more information islands

MCL had several ‘islands’ of systems (its own legacy applications) running across its three manufacturing plants and its corporate office in Chennai. In order to gain a competitive advantage, it had begun investing in computerising its payroll, finance, inventory, and invoicing systems in 1985. However over time every plant had its own systems, platforms, and processes. Due to a lack of integration and different reporting formats across plants, reports got delayed and accounts did not tally. The flow of information to the corporate office was not on time. Key information such as financial and production details were not uniformly available and there was a mismatch of information generated by production plants sent to the corporate office. This resulted in unnecessary delays in preparing a monthly accounts report.

Shopping for software inhouse

Once the management decided to go in for an ERP system, the first choice was Ramco Systems’ e.Applications. C V C Rao, general manager-Information Technology, Madras Cements, says, “Packages from other ERP vendors were not seriously considered as the top management felt that choosing a package from our own group company would ensure smoother implementation and better servicing. In case of any problem we would be able to fix it faster since the software is supplied by a group company.” It was also felt that implementing Ramco e.Applications would ensure smoother integration with other Ramco applications such as the real time system and open cost mining

system used by MCL. e.Applications had a suite of Web-enabled products for the cement vertical. This version offered continuous process productions suite, productivity tools and reporting formats.

A phased implementation

To begin with, the ERP system was rolled out at MCL’s RR Nagar plant in Tamil Nadu. A phased approach was adopted to iron out the weak links in the implementation and replicate this system at other plants. Rao explains, “We went in for a phased implementation as we felt that it would avoid duplication of any implementation problems when rolled out at other plants and the corporate office.”

The first phase of the implementation was undertaken in November 1999 and was completed in about eight months. The major task was to map existing processes across nine functional modules such as—finance, sales, logistics, CPP (Continuous Process Production), ore management systems, maintenance, customisations for sales and logistics and HR, and to create a standard set of ‘to be’ processes, and then test them. The team consisted of people from the plant and the corporate office. It took a month per module to map the existing processes and convert them into ‘to be’ processes. There were a few customisation problems. Rao explains, “Some of the processes within the ERP system had to be shrunk to handle the huge volume of invoices (six lakh per annum) being generated by MCL’s plants.”

This was followed by a comprehensive training programme, which covered the basic overview of ERP as well as details about the impact of ERP on each of the nine e.Applications modules. Every ERP user underwent basic training. Once all processes were in place and fully tested, Ramco Systems started deploying e.Applications at the RR Nagar plant in November 1999. A month after this implementation, the other two plants (Alathiyur and Jayanthipuram) went online. In a few months, all the plants and the corporate headquarters at Chennai were successfully running e.Applications.

Advantage e.Applications

The implementation has streamlined transactions systems across plants. It has helped MCL develop an in-house MIS (Management Information System), which helps the management get information from its plants on a daily basis.

There was a substantial improvement in capacity utilisation across the organisation. For instance, it was found that some costly mining equipment was under utilised. After comprehensive analysis of mines, equipment and shift (labour) performance, 60 percent of heavy equipment has been withdrawn from operations due to poor performance and underutilisation. The number of shifts has been reduced from three to two. By continuous monitoring, production and processes are synchronised.

Productivity per hour has risen, as has the generator utilisation rate. Power consumption per tonne of cement produced has reduced by continuously monitoring factory operations using real time data in the ERP system. Preventive maintenance schedules are strictly adhered to and this has helped in reducing equipment downtime. Maintenance costs are analysed so that the workforce can understand the operating cost and put its mind toward bringing down maintenance expenses.

Uniform net weight in bags

It was found that there was variation in the weight of the cement bags being supplied to MCL’s dealers. This was overcome by the ERP system as it streamlined the information registered at the time of packing and collection. Rao says, “Prior to the implementation, the weight of cement bags varied by 60–70 percent which was affecting our revenues. We have now been able to maintain 97-98 percent accuracy regarding the weight of cement bags. This has resulted in substantial savings and improved our bottom line.”

Improved logistics

The ERP implementation has also improved the logistics processes running at MCL. Pending orders can be executed within 24 hours resulting in improved customer satisfaction. The transporters’ freight is analysed on a daily basis based on which logistic requirement is ascertained. Stock transfers to depots are handled without any re-handling. Analysis of ERP data has also led to the closure of over 90 stock points which has helped the company save millions of rupees on stock holding, transportation and re-handling.

Coming soon, an integrated dealer network

Although no new add ons are planned, MCL is extending its ERP system to include its dealer network so that its top dealers across the country can access the system (ERP) to place orders and generate bills online.

abhinav@expresscomputeronline.com