Project Log

Forging fasteners with greater efficiency

Ankit Patel, Managing Director, Ankit Forgings narrates the tale of his company’s ERP roll-out to Akhtar Pasha.

Ankit Forgings is an ISO 9002 company. This family-owned business was established in 1989. The company manufactures precision fasteners used in various applications such as aerospace, automotive OEMs such as Mico Bosch, textile, electronics and home appliance industries. It has two manufacturing facilities in Bangalore. Ankit’s premier customers are HAL, ISRO, NAL and the like. It earns 70 percent of its revenues from sales to aerospace with the balance coming from the automotive sector.

We had been using standalone packages for our business operations. For example we have been using Tally as a standard accounting package and continue to use it even after implementing SAP Business One. For invoicing we had used a printing software solution. Other applications were in use for labeling and packaging. All these applications were developed in house using Visual Basic. One of the key challenges of using these business applications was that they never provided the information that was required for daily operations. The invoicing was done using printing software and the same had to be entered manually into Tally. Each product had two invoices—one for the raw materials that were to be used for manufacturing fasteners and the second for the finished product. Since we used to bill 30,000 invoices it was difficult to consolidate this data and the entire process was subjected to errors or incorrectly entered data.

There were mandatory guidelines described by aeronautical customers that required Ankit to preserve records for 10 years for the components used in manufacturing such as raw materials, heat number, chemical composition at melting point and heat treatment. We had to keep track of the entire life cycle of the fasteners because these fasteners are used in national-level projects and in the event of any malfunctioning, it can be traced easily through the entire supply chain. We were doing this without much success as the entire process was manual. Additionally there was no mechanism to know the exact inventory and stock status.

Production planning was still on paper and manual. For aerospace the lead time was 12 months and there were seven to ten processes the product has to undergo before it gets shipping out. Additionally these processes were outsourced to three or four third parties. In the case of the automotive industry the lead time was two-three months and we used to start planning for manufacturing when we had three months of schedule and a month of confirmed orders. Since the data was not available on the raw materials/stocks online we used to end up buying surplus quantities leading to capital getting locked up. Additionally we were not able to locate the tools (dies).

Enabler for growth

We are a SMB outfit with a turnover of Rs 10 crores and we are growing at 40 percent annually and we need IT systems that keep pace with our growth and provide vital information regarding our core business to support growth. As the company is in a growth phase, it needs a higher level of efficiency and accessibility to information. We were looking for a solution that would integrate data, streamline business operations, and grow with the company.

Prior experience

I had the experience of working on SAP R/3 in a Fortune 500 company—Black & Decker in Baltimore, USA—and I wanted a similar solution to be implemented at Ankit Forgings in Bangalore. Ours being an Rs 10 crores company investing in a solution like SAP R/3 was not feasible. Hence we decided to go for SAP Business One, after evaluating SAP and ADPAC solutions. Although ADPAC’s solution was strong in FI we knew for a fact that they had added MRP II and other modules as add-ons—but it was not tightly integrated. We also wanted a Management Information System in place. SAP Business One met most of our requirements but there are certain business functions that are weak in it. For example production planning is quite basic in nature and is more suited for traders. There is no quality module in SAP Business One. The functionality in SAP R/3 that lets you conduct advance capacity planning as per machine and routing it is not fully evolved in SAP Business One. Other functionality such as fixed asset register is not available in the software and SAP’s partners are building it.

However there are many pluses in SAP Business One. For example the finance module is neatly packed especially the Indian duty structure (VAT). Should there be any change in VAT next year all we have to do is go to the master and change the value there and it gets updated at a single stroke. It is ideal for SMEs and user-friendly and has more user deployments than any other vendor in the market.

The aftermath

SAP Business One was implemented in April 2006. Clockwork Business Solutions was the implementation partner and it also trained the employees.

We are pleased with the implementation. The SAP Business One application is an integrated system with one central database; the user can access all transactions, activities and documents relating to a customer, a supplier or even a product. Though the business cycle is longer, the system acts as a check ensuring the accuracy of reports. As the information is consolidated, tracing and verifying data has become easier. SAP Business One presents data in the right form, and data is more structured leading to faster decision making.

Earlier, there was a lot of data, and often, duplication of work with legacy systems. This has been completely done away with. The availability of up-to-date information on time has led to faster decision making and reduction in manpower.

Each and every component from raw materials up to the finished product stage can be traced without much ado. A particular route card is mapped to the raw material and is traced in the supply chain. Should there be any rejection of any batch we can drill down to the problem area quickly and take decisions immediately.

Earlier in the legacy system it used to take two minutes to enter and print the invoices and another three minutes to enter the data into the Tally system. Post SAP we are saving 3,000 minutes per year.

• Online stock update: There is no need to call the store guy to get the status of the materials or stocks status. We used take the information from Tally and add all the items manually (which was error-prone again) to arrive at the final stock status spending around 20 minutes for this process to get the stock status. Post implementation this information is available online.
• Transparency in traceability and accountability: All the raw materials are tracked with part numbers and in SAP systems the same part number is maintained from raw material stage to the finished product. Since all the business-related information is available online we can do credit analysis of all customers. Earlier we could not get status on how much customers owe us (total number of bills outstanding for payment). Now we can generate a report at one stroke on outstanding bills. Similarly we can get other reports easily such as the item- wise daily sales analysis. SAP Business One has helped Ankit serve its customers better in terms of delivery and meet their needs. As the company is growing, it is vital to have analytical reports and up-to-the-minute information in order to know what is happening to the business on a day-to-day basis, and SAP Business One has proved to be very useful in this regard.
• A new window of opportunity: Implementing ERP has helped Ankit Forgings gain an accurate, up-to-the-minute picture of its business leading to new business opportunities in the form of exports. Using an SAP system and practices in manufacturing international standard products ups our ante and chances of getting export orders. The software has made us a better business.

We are looking for other SAP solutions in sync with our future plans, and would like to add specific modules on material requirements planning (MRP), quality etc., and invest in IT as well, after a year.