Project Log

Technology for transformation

Core business technology can help increase a company’s bottomline. Sanjay Mittal, Head of Information Technology, Navin Fluorine tells Abhinav Singh how implementing SAP R/3 has helped his company.

We were facing lot of problems with the disintegrated software packages that we had developed in-house and were running across various locations. We have two plants—one in Surat, Gujarat, and the other in Devas, Madhya Pradesh—and five sales offices. Our corporate office is in Mumbai. The major problem with the in-house software was that it catered only to individual departments. For instance, there was a software package for the stores department at Surat that was not integrated with the one used at the Devas plant. Since there was complete disintegration of information, the data had to be punched in repeatedly and hard copies had to be sent to the corporate office for decision. The task could only be performed manually and was prone to errors. The problem of operating disparate software packages across various functions and locations was severe. In some cases, there were eight different applications for the same function. All of this created major gaps in Management Information System (MIS) data, requiring a significant degree of reconciliation at each stage.

The consolidated data from different departments and locations took about 15 to 40 days to reach the corporate office, which was affecting decision-making as the data used to be inaccurate. This was of great concern to us as the response time for effective decision-making became very slow and we were losing our competitive edge. We tried some upgrades internally by bringing uniformity to the software packages but that remained restricted to the respective departments. The biggest problem was that the software was not scalable as it had been developed on FoxPro and we were not in a position to handle the organisation’s growth.

Out with the old

Our priority was to get rid of the legacy systems and replace them with an integrated information system. The aim was to align top-line growth with new business models and strengthen the speciality chemicals business amidst global competition by getting visibility through real-time data. We also wanted an application that would scale, as we grew. We were looking for an ERP system, which would cover all our areas of business and had the capability to analyse the information and tap opportunities through MIS. Further, we wanted a vendor with local presence to support us. In the process we evaluated packages from SSA Global, Oracle and SAP. After a thorough evaluation we chose SAP because it was in a strong position to provide local help within India, its technology architecture was Web-enabled and its business practices could help us develop a platform for painless upgrades.

Implementation

In order to automate our departments completely and capitalise on the ecosystem of the SAP product we went in for a two-phase implementation exercise. During Phase-I we covered the basic modules of the SAP product, which included finance, sales, distribution, materials management and India taxation. In Phase-II of the deployment we included modules such as production planning, quality management, plant maintenance, costing, profitability-analysis and asset management. The implementation was completed in 90 days and around 15-core team members were involved in the process. Bristlecone did the system integration. Customising the ERP system in adherence with 40 years of processes was not easy. We had to manually upload the master legacy data into the new system. The implementation began in April 2003 and went live in June that year.

Returns on investment

Post-implementation, our organisation has become process-oriented and there are standard processes which have helped us set benchmarks. Smoother information flows, greater productivity and improved time-to-market are some of the benefits that we have derived. Overall, we have been able to get our Return on Investment within a year of the implementation—adding one percent of revenues to our bottomline. Growth has flowed from improved productivity and decision-making because of robust and real-time data availability. For instance, data compilation from different locations to the corporate office that took 15 to 40 days prior to the SAP implementation has now reduced to a few seconds. The package has helped us become a truly-integrated and process-based organisation that allows us to respond to market challenges.

The profitability analysis module of the SAP R/3 has helped us improve production planning. We are able to assess cost and profitability at each stage of production. This has enabled us to make process improvements by setting consumption norms for each product, thereby controlling receivables and optimising costs. We expect to derive major ‘life-time advantages’ from implementing SAP solutions. Compared to legacy systems, which needed to be changed every six or seven years, SAP solutions are expected to prove effective for 20 to 25 years and beyond. The package has resulted in improvement in procurement. Today, orders booked by sales teams are automatically linked to the production and logistics department, enabling substantial reduction in time-to-market and improved customer satisfaction. User satisfaction levels are at peak as we have been able to generate a full year of financial balance sheets using the ERP system for the last two consecutive years.

Up next: HR and CRM

We are currently evaluating the need to have a Human Resource module as well as a Customer Relationship Management system. These two deployments will be our priority.

abhinav@expresscomputeronline.com