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Textile major gets ERP right

The Krishna Group’s ERP deployment is a textbook example of how IT should be integrated with business processes. Megha Banduni finds that the company's efficiency has improved and its decision-making processes have been enhanced as a result of the implementation.

From a company that had a single textile unit engaged in knitting yarn in 1977, the Krishna Group has blossomed into an organisation with five sub-groups in 19 locations and is worth Rs 2,500 crore. This rapid growth meant that the management needed to look for solutions that would help it integrate processes and improve resource utilisation.

After examining various options, the management went in for an ERP system from SAP (mySAP), hardware from IBM and networking equipment from Cisco.

The project was completed in nine months with a budget of Rs 4 crore. It had its fair share of challenges. The project commenced in December 2004 and the system went live on August 26, 2005.

The need for ERP

"The company is now in a position to re-engineer and automate its processes to suit changing business environments" - Saurabh Kumar Tayal Chairman KSL and Industries

The Krishna Group is a leading textiles player in the country. It has 19 units with integrated textile manufacturing facilities in Silvassa (Dadra and Nagar Haveli), Bhilad, Vapi, Navi Mumbai, Dombivli and Tirupur (Tamil Nadu). The company has 32,000 employees.

“Today, we are spread across 19 locations; tomorrow the number may increase to 40. It would be impractical for us to travel to each location, collect data and talk to so many managers and employees. Through ERP, every unit will use one platform, making things better and easier,” says Saurabh Kumar Tayal, Chairman, KSL and Industries.

As of now, the company has diversified into real estate and has plans to open retail outlets. “Within the textile business, we are present in spinning, knitting, processing and garment segments. We realised that with the number of activities spread at various locations there was a need to integrate and hence ERP was necessary,” explains Tayal.

What the system delivers

The new system enables the company to incorporate organisational processes, such as planning of operations, forecasting seasonal demand, budgeting, material availability, measuring performance and reducing defects, minimising inventories and controlling quality within one system so that data can be routed and utilised wherever needed.

Tayal believes that the system offers the company an opportunity to cut costs, become more efficient, and deliver impressive benefits. The company is now in a position to re-engineer and automate its existing business processes to suit changing business environments.

Textile manufacturing revolves around three entities—customers, banks and suppliers. A customer gives a sales order to the company and this forms the basis for production planning. Raw material is purchased and dispatched to the mills. Receipts and payments are made through banks. With the new system, the group wanted to maintain its procedures. ERP has enabled accountability, accuracy, and transparency without breaking the existing workflow.

Before the ERP deployment, most of the work was done manually resulting in inaccuracies—both incorrect and missing entries. Tayal explains, “Earlier there were slip-ups in quality. After implementing ERP, at every stage of the process (whether at the purchase or at the manufacturing site), data entry on quality aspects is done on the computer and if there is loss in quality, a check is made on what went wrong and at which stage. This was not possible prior to the implementation.”

After implementing ERP, leakages were plugged. Each of the company’s locations is connected and approvals are given online saving time, resources and reducing duplication of work. The system has brought in transparency permitting better and faster decision-making.

“Since most of the information is online we can access it easily. Thus, at any point of time, if I want to know what were the prices or supply or demand last year, I can immediately access the information from the ERP system, which was not available earlier. This has led to faster decision-making. The ERP system lets me know the current stock status at all 19 locations, right from raw materials to finished goods,” says Tayal.

The information was available in the past, but took a couple of days to accumulate from all 19 locations and combine.

Making a choice

After due consideration, mySAP ERP was decided upon. The primary criterion was that the solution had to be simple to implement, especially the data entry process. The company followed an evaluation process and other contenders considered by them were JD Edwards, PeopleSoft, Baan and a few domestic suppliers.

“In ERP, almost 70 percent of the market is dominated by SAP and that helped us make our choice. Secondly, the top Fortune 500 companies use SAP, and one of the most important criterion was the support that SAP offers in India,” says Tayal.

The biggest challenge for the Krishna group was to change the mindset of its employees. There was an impression in the minds of employees that computers or technology would take their place and the company would no longer need them. Since this was first time that the organisation was deploying technology, time was not a criterion. However, Tayal was quite satisfied as the project was completed in just about nine months covering all 19 locations.

Winds of change

The management also realised this and went through a detailed process of training since the skill levels were varied. “We trained approximately 12 employees per location for three months in all 19 locations. Most of them did not even know how to use a mouse,” says Tayal.

He feels that change management was successful in creating the right atmosphere of adaptability to technology. The success can be seen as all those who were trained are using SAP today and are happy working this way.

KSL’s Wide Area Network

Hinterland connectivity

Another major problem was connecting 19 locations, most of which were situated in remote areas. Point-to-point leased line connectivity was given to all the locations. The connections were taken from MTNL and VSNL.

Connecting branch offices to the HQ was crucial. Production and other activities had to be co-ordinated. Hence, an ISDN backup was put in place. 24x7 support is given to employees in all locations through the Internet.

To secure the set-up, the company has deployed Cisco firewalls with data encryption software. Anti-virus software was also installed.

Beyond ROI and profits

Tayal feels that the advantages of the ERP system need not be measured only by ROI or profits. For instance, having an ERP system enables them to check quality, inwards and outwards online. They can keep track of stocks, materials-in-transit and so on.

“After implementing ERP, employee workloads have halved. For e.g., earlier we sent papers from one location to another and manual data entry had to be done at both locations resulting in extra work, delays and mistakes,” remarks Tayal. He further adds, “The project has definitely benefited our business from the stock point of view, faster documentation, faster systems and from a leakage point of view. Now accounting concerns can be viewed and handled through a PC or laptop at any point of time.”

The road ahead

However, the mySAP implementation is just the beginning of the company’s journey on the technology highway. They are looking at deployments of SCM, CRM and HR. Tayal feels that ERP is the basic platform.

The company is planning to open retail shops and malls in India. It has already opened a retail mall at Lower Parel and is planning to open more at Malad, Navi Mumbai and Nagpur.

megha@expresscomputeronline.com