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Macmillan trims inventories

The company used SAP R/3 to integrate its core business processes, reduce inventory levels, and raise productivity, says Abhinav Singh

Macmillan India was established in 1893. This book publisher is also into information processing and e-business. The company has a network of 22 showrooms and branches across 25 Indian cities, with sales offices in London and New York. The corporate office is located at Bangalore, and the national editorial in New Delhi. 1,200 people work with the company, which has, over the years, grown into one of the leading publishing houses in India. The company went live with a SAP R/3 implementation in January 2002, which has helped make its operations more efficient and improve its core business.

Too many systems

Prior to the SAP R/3 ERP deployment, Macmillan was using several legacy systems (developed using FoxPro and Oracle) which were not interconnected and failed to talk to each other in real time. These systems were running applications such as sales and finance, payroll and inventory management. Many of the applications were home grown and developed by certain individuals. Whenever one of these individuals left the organisation, the others didn't have the expertise to work on the systems. Moreover, the systems catered to the lower rungs of the organisation. M Visweswaran, Macmillan's chief information officer explains, 'The data which was being produced by the legacy system was catering to clerical activities, and was not satisfying the needs of the higher management; this affected the process of decision-making. The flow of information was not uniform, and there was no control over the flow.' As a result of the legacy systems, Macmillan was unable to control its expenditure effectively, and this led to rising inventory costs.

The company also wanted to automate its business processes to ensure that customer orders were fulfilled swiftly and accurately, financial and cost accounting was seamlessly integrated, and manufacturing and HR processes (including payroll) were completely automated. In brief, the management wanted the entire organisation to work on a single software application for all its functions.

The evaluation

It was important that the package complied with Indian tax rules and regulations M Visweswaran Chief Information Officer Macmillan India

From 2000 onwards, the senior management team at Macmillan was serious about doing away with the legacy systems and investing in a standardised ERP system. A cross-functional team comprising people from different departments was set up in June 2001 to evaluate standardised ERP packages offered by different vendors. Says Visweswaran, 'Packages from JD Edwards and Ramco e-Enterprise along with SAP were independently evaluated by each department according to its requirements; the departmental requirements were kept in mind during the evaluation exercise.'

Zeroing in After scrutinising the pros and cons of each, the management decided to go in for the SAP R/3 ERP package. Visweswaran explains the choice: 'We were looking for India-specific functionalities in the package; it was important that the package complied with Indian tax rules and regulations. It was also decided to go in for a well-known brand. Finally, Macmillan wanted to deal with a financially stable EAS (Enterprise Applications Software) vendor who could provide us with continuous support and service.'

Process integration

The implementation kicked off in August 2001, and Mahindra Consulting was hired as a consulting partner. Says Visweswaran, 'We wanted to bring in professionalism during the implementation exercise and ensure that each and every function of the ERP package was fully and efficiently embedded into Macmillan's processes.'

Integrating all the processes running at Macmillan posed a big challenge due to its vast area of operations. IT administration had to be centralised. Data transfer from legacy systems into the SAP environment was tedious as it had to be ensured that no discrepancy popped up during the transfer. But they were able to roll it out successfully, and all the centres across the country went live by January 2002.

Productivity boost

Post-implementation there has been an increase in the productivity levels of its workforce. Now all the processes at Macmillan are well-documented and supported. Part of the workforce that was earlier involved in managing its legacy systems now concentrates on its core businesses, book publishing and sales. Earlier, Macmillan used to also employ IT people at the regional level, but with the new centralised data processing approach the total cost of ownership has come down substantially. All business processes are now integrated, and there is data visibility across the organisation.

With superior planning, the company has been able to meet its sales agreements with about 5,000 customers across India. Since there is visibility of information, it is easier for Macmillan to avoid carrying extra stock. Earlier, when different legacy systems were in existence at each office, the company did not have information with regard to the number of books required by different customers. With the centralised ERP system now in place, different offices can immediately place orders at short notice, and books can be delivered without keeping the extra stock that was kept earlier in anticipation of customer demand.

SAP R/3 has facilitated the smooth roll-out of the SAP business warehouse solution at Macmillan. The business warehouse solution sits on top of the R/3 ERP system, and helps the organisation analyse information from different departments. The company also plans to roll out an analytical CRM solution in the near future, and is in the process of evaluating vendors for the same.

abhinav@expresscomputeronline.com