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Peer-to-Peer
Rubber ERP
Having made an investment of rupees one crore in its ERP
system, the company is in a position to access information faster, improve its
operations and standardise processes across business functions. By Megha
Banduni
 Gujarat
Reclaim and Rubber Products Ltd. (GRRP) has become the first company in the
reclaimed rubber industry in Asia to deploy mySAP ERP. The company has always
considered itself a torch-bearer in technology usage and it wanted to set a
standard in the industry through this implementation.
The focus during this project was to ensure that the company
was able to speedily demonstrate the value of ERP to the rest of the industry
through a combination of process innovation, improved productivity and enhanced
revenues or profitability.
Keeping these factors in mind, Patni integrated SAP’s
ASAP methodology, its proprietary cost-benefit analysis framework called iReturns,
and a comprehensive change management roadmap to achieve a smooth ERP implementation.
"We did not have a uniform view across information sources spanning
general ledger, order entry,
inventory systems,
shop floor control and manufacturing operations"
- Rajendra Gandhi
Managing Director
Gujarat Rubber and Reclaim Limited |
With the SAP implementation, Gujarat Reclaim is in a position
to retrieve information about its inventory of raw materials of various grades
and plan its manufacturing. It is now able to control critical parameters such
as the cost of packing, freight and material rejections.
Prior to the implementation, the company had a FoxPro based
system for handling functions such as accounting and payroll. It was also using
products from the MS-Office suite for addressing its basic financial computing
needs. As a majority of these systems were commissioned for handling a single
function, the company was facing difficulties in consolidating information across
disparate systems.
“This was a hindrance to effective decision making,
as we did not have a uniform view across information sources spanning general
ledger, order entry, inventory systems, shop floor control and manufacturing
operations,” says Rajendra Gandhi, Managing Director, Gujarat Rubber and
Reclaim Limited.
Creating a difference
Says Gandhi, “At Gujarat Reclaim, we have always aimed
to adapt to evolving customer requirements by staying ahead of the technology
curve. As we started expanding our footprint in global markets and competing
against international players, the management realised that faster availability
of information and adherence to benchmarked industry standard practices would
help make a difference in the highly unorganised business of the reclaimed rubber
industry.”
The desire to evolve its operations inspired GRRP to benchmark itself against
industry best practices, drive operational improvements and seek process standardisation
across various business functions.
With the objective of streamlining business processes, the management decided
that an ERP solution would prove to be useful in obtaining a consistent, singular
view of the business at any point of time and in reconciling and removing inaccuracies
in the data available with accounts, stores and purchasing.
“Besides the imperatives of low cost, high quality, and speed in decision-making,
our ultimate goal was to have systems and processes that would earn us the reputation
of being a company that is innovative and ‘easy-to-do-business-with’,”
adds Gandhi.
After a rigorous review of the available solutions in the market, the company
identified SAP as the best ERP solution as it was a full-featured application
and could scale to cope with its future needs.
| Cultural compatibility, software competency and domain
knowledge were the key requirements GRRP was looking for and Patni seemed
to meet all these requirements.
The Patni team demonstrated a great sense of camaraderie,
which combined with their technology expertise were factors that helped
the company transition from a people driven to a systems driven business.
It has helped GRRP adapt its operations to the best practices and deliver
extra value to its customers through better inventory turns, lean cost
structures, and diversity in offerings.
Patni understood its requirements well, and was instrumental
in helping it transition successfully to a SAP system.
From designing a change management roadmap, analysing
issues of concern, taking corrective actions, and conducting extensive
training sessions for users—the team from Patni ensured a quick and
successful implementation.
—Rajendra Gandhi, Managing
Director, Gujarat Rubber and Reclaim Limited.
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Roll out in phases
"Gujarat Reclaim’s
business experts are able to utilise their time to take business decisions
and leave the technology issues to the SAP system"
- Milind S Padalkar
Senior VP and Head- Enterprise Application Services
Patni Computer Services |
The implementation began in mid January 2005 and was completed
by August 2006 in two phases. During the first phase, the company implemented
the solution at its Mumbai Head Office, Ankleshwar factory and Solapur factory.
In the second, it rolled out the solution at its Panoli facilities.
The total investment was to the tune of rupees one crore, including the cost
of hardware, software licenses, networking, training and system integration.
According to Milind S Padalkar, Senior VP and Head- Enterprise
Application Services, Patni Computer Services, “Gujarat Reclaim was the
first company in that vertical to implement mySAP. Therefore, Patni had to have
a complete understanding of the processes in this industry. We worked closely
with the customer to gain this understanding and were then able to map the requirements
into SAP.”
Doing this mandated:
- Mapping business processes
- Identifying the gaps in SAP
- Identifying how the gaps could be overcome using
a combination of process change and customisation
- Providing users with an opportunity to test the
system with unique business requirements before the solution was put into
production
“All this ensured that Gujarat Reclaim no longer had to use the myriad
systems that were being used by it and that its business experts were able to
utilise their time to take business decisions and leave the technology issues
to the SAP system,” adds Padalkar.
| Improved planning and accurate delivery
dates for products |
With SAP, it is possible to retrieve
information about the inventory of raw materials of various grades, create
recipes and plan the manufacturing of a variety of products. These capabilities
have helped the company in adhering to accurate delivery dates for each
of its end products and increase its planning horizon from a couple of weeks
to two months. |
| Flexible pricing for maximising customer
value |
Gujarat Reclaim has rendered its cost
structures completely transparent. The company is able to control critical
parameters such as packing costs, freight costs and costs due to material
rejections. With this capability, the company is now able to offer flexible
pricing to its customers-a capability that was lacking in the earlier system.
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| Support for local business requirements |
The SAP system has simplified the complexities
involved in financial accounting. It provides flexibility to take into account,
statutory requirements pertaining to excise duty, value-added tax, income
tax, and sales tax. |
ASAP methodology
During the initial discussions on the project, Gujarat Reclaim
had expressed an interest to re-engineer its processes to make them “best-in-class”.
Explains Padalkar, “In all our implementations we have found that the ASAP
methodology provides a good framework to help organisations organise industry
standard processes as a part of a standardised solution.”
The ASAP methodology allowed Patni to use standard templates and speed up the
implementation– while at the same time retaining the unique nature of some
of Gujarat Reclaim’s processes. The methodology also let it follow a template-based
approach towards documentation and training—two critical aspects of the
implementation.
Out with the old, in with the new
This being the first SAP implementation in the reclaimed rubber industry, the
company didn’t have any past knowledge or experience to draw upon. An important
consideration was to ensure that there is no disruption to existing business
during the transition from the old system to the SAP solution. There was also
the issue of how end users would move from systems they had been hitherto comfortable
with, to a totally new solution.
Explains Gandhi, “We were ably guided by Patni whose experience in handling
SAP implementation projects enabled us to achieve a transition from being a
people-driven business to a system-driven one.”
Understanding the critical role of end users in the success of an implementation,
the company invested a significant amount of time and money in training, educating
and motivating its employees vis-a-vis the benefits of implementing mySAP. As
a result, most employees understood that the implementation is a key driver
for organisational growth, which was ultimately a critical factor in achieving
a successful implementation.
Scoping: Understanding and deciding what modules
of SAP need to be implemented
AS-IS: Taking a stock of the existing business processes
TO-BE: Mapping existing business processes to SAP. This helped in
understanding the gaps between the AS-IS and To-BE processes, and the steps
that needed to be taken to narrow these gaps.
Process Blueprint: By assessing the gaps between the AS-IS and TO-BE
processes, a process blueprint was prepared, which documented in detail
the scope of business scenarios, business processes, the steps followed
by every process, and the requirements of the solution implementation. This
phase also included extensive training and handholding on SAP for helping
the employees understand SAP’s capabilities.
Realisation: In this phase, GRRP did the configuration of different
modules and fine-tuned the processes as defined in the process blueprint.
Testing: All the key users did extensive testing to check if there
were any problems in the various modules for handling different functions.
This also included testing and training the various users on the new system.
Go Live: After thorough checking of the systems was done, the SAP
system was commissioned for going live. |
Patni’s perspective
There were a few challenges that Patni had to face during implementation. In
most organisations, resistance to change is a key factor that has an impact
upon the success of a project. Patni worked closely with the Gujarat Reclaim
management team to identify the roles that each user would play in the organisation
(post implementation); discussed the same with many users and helped them come
up to speed with regards to the knowledge of the system (in some cases it meant
additional training to some end users).
End user involvement was another challenge. Patni recognised that the success
of the ERP implementation depends on the active involvement of end-users. With
this in mind, Patni made multiple presentations to the users providing them
with insight into the value that the solution brings to their function or role
and how each function and role is critical to ensure a successful roll out.
The senior management of Gujarat Reclaim was present during a number of these
sessions. They spent a good deal of time in clarifying how ERP can help deliver
the vision of creating value for customers, year after year. Sharing this vision
reenergised the staff and gave them direction.
Senior management participation was a significant aspect of this implementation.
According to Padalkar, the Gujarat Reclaim management team was personally involved
in all aspects of the implementation, be it the signing off on the blueprint
or the change requests made by the users. This hand-on approach ensured that
the project team could identify different approaches for enhanced value creation.
This spurred users to increase the levels of process innovation and catalysed
the shift from home-grown systems to ERP.
Accuracy and flexibility
Within eight months of moving to the new system, Gujarat Reclaim is seeing significant
payoffs by adapting to the best practices laid down by the ERP system. Some
critical business benefits include accurate delivery dates for products, flexible
pricing, a four-fold increase in the manufacturing planning horizon, and support
for local business requirements in different geographies across the globe.
Says Gandhi, “The SAP solution is expected to provide Gujarat Rubber Reclaim
with the necessary IT backbone to consolidate our leadership in the industry.
The solution as implemented by Patni has been instrumental in strategising a
future roadmap for the organisation in addition to providing post implementation
application support.”
Future roadmap
Currently, Patni is providing annual maintenance services to Gujarat Reclaim
for their SAP system. Going forward, the company has plans to implement SAP’s
banking, finance and administration (F&A), and plant maintenance modules.
It also plans to implement solutions from SAP partners for functions pertaining
to payroll processing, export documentation and regulatory compliance. The company
is closely working with Patni to provide extensions in the area of business
warehousing and strategic enterprise management.
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