Maruti Udyog Ltd... when MUL decided to go in for an automated management system about a decade ago, there was no ERP vendor support available in the country. Without losing time, the company decided to go it alone and work things in-house. Using a combination of software from Oracle and Computer Associates, the company built apps that facilitated  and integrated its business processes.

At ICI Paints, the entire manufacturing process—from dumping of raw material in precise quantities into dispensers to filling of final product in cans or containers—everything is totally automated. ICI Plc, the parent company in the UK, developed this software—Sequin—in-house. But the core of the manufacturing technology infrastructure at ICI is BPCS ERP package from SSA Global Technologies. BPCS handles the manufacturing resource planning and master production scheduling—in other terms, the entire production scheduling. The recipes for manufacturing paints are also contained in the BPCS, and they are communicated to Sequin through BoMs. Sequin handles the manufacturing instructions sequence by sequence.

With a turnover exceeding $8 billion, BPCL is the only Indian petroleum company to be listed in the Forbes’ International 800 ranking. BPCL has 4,500 petrol pumps, 1,000 kerosene dealers and 1,400 LPG distributors. The company also supplies fuel directly to hundreds of industries and international and domestic airlines. One of the primary concerns was the need for a communication mechanism—to cut down on the response time. To facilitate communication and information dissemination within the organization, one of the first changes to affect employees on a wide scale was the decision to implement a messaging infrastructure and an Intranet. BPCL uses the Internet to reduce turnaround time, besides expanding its customer base.

Even as standalone case studies, these underline the potential that exists in India. Giant strides towards global competitiveness—at least in terms of the process and design, if not also in terms of cost, product quality, or marketing—have been enabled by largescale IT adoption in the sector. The culture of using global packaged software applications has now begun seeping into the bottom of the pyramid, populated by scores of fabrication and process houses. IT solutions in the form of ERP for handling business transactions and CAD/CAM for product design still makes up a large chunk of technology deployed by Indian manufacturing organizations. An IDC India end-user survey of 200 enterprises pointed to these three factors as the triggers for selection of an ERP solution:

• Industry-specific and mission-specific functionality;

• Compatibility with current platforms—the ability to handle different types of databases; and

• Degree of customization possible.

Delivery in the key
Business benefits aside, the right ERP should be able to deliver well on three necessary but not sufficient objectives—consistency and reliability of data across the organization; streamlined transaction processing; and operations-level reporting. The five reasons most undertake an ERP project are integration of financial information; integration of customer order information; standardization of and speed in core business processes; reduction in inventory and non-performing assets; and standardization of HR information.

Says Hari Padmanabhan, president (enterprise solutions) at ICICI Infotech, "Organizations large and small find ERP the best tool to move money from the cost-line to the bottomline." The larger part of the Indian ERP story is just three to four years old. And such organizations now stand to gain even more from refinements on top of the basic ERP. These are typically enterprise applications in the area of customer relationship management, supply chain management, business intelligence, enterprise portals and knowledge management, amongst others. Traditional ERP vendors like SAP, JDE, Oracle, Baan and PeopleSoft also claim to deliver these functionalities as part of the ERP offering. The term ERP II is used to denote the new-age ERP—with commerce and collaboration capabilities.

The IDC India report also states—"Post-Internet meltdown and economic slowdown, many organizations have realized the need to put their house in order and operational efficiency has become critical for survival. The Indian economy has become much more integrated with the world economy at large and therefore, Indian businesses need to respond faster to changing business conditions."

Key trends, according to IDC India, are:

• Larger organizations are trying to extend the reach of their ERP systems to cover the supply chain as well as automate some of their interfaces with their customers;

• SMEs are actively trying to automate their business processes;

• Organizations are also trying to explore the use of Internet to manage their business processes; and

• Mid-tier vendors are aggressively expanding the market through extended offerings and adding functionalities to existing products.

Explaining the ERP adoption by mid-market companies, Padmanabhan says, "These organizations have the required global mindset, the linkages are well understood, the appreciation is there at the top level, the suffering under a silo-based approach—all are understood. A suitable product that is easy to acquire and deploy, therefore, helps."

ICICI Infotech and Eastern Software Systems are the new breed of vendors that have a mid-market ERP product available for the domestic market. Such vendors are experiencing galloping growth. ESS, with its product Ebizframe (ERP), has a customer base of over 220 clients across industry verticals like auto ancillary, manufacturing, heavy engineering, chemicals, retail and garments, including retail and manufacturing.

After putting in the ERP, companies look for refinements that are possible. For manufacturing companies, managing their supply chain provide the greatest benefit. Supply chain management is a complex discipline in itself; a science practiced at the level of an art. At the very basic, SCM by definition covers the following areas:

• Plan to meet customer demand;

• Pricing, payment and delivery processes with chosen suppliers;

• Activities necessary for production, testing, packaging and delivery;

• Logistics dealing with delivery to meet customer demand; and

• Network to receive defective products and excess inventory returns.

We have quite a few success stories with integrated supply chain solutions. Asian Paints experienced significant inventory reductions at all levels—raw material, intermediate, and manufactured goods; improved forecast accuracy; and improved plant throughput. Hindalco, the Aditya Birla Group company, had a breakthrough with an e-procurement solution for certain standard raw material items—for which there were five to six suppliers. It developed an in-house reverse auction software and has reported savings to the tune of 3-10% in costs of various items.

Marico Industries has improved its distribution function and can measure the effectiveness of its sales partners through mySAP SCM. Marico’s supply chain consists of five factories, 15 contract manufacturers, two consolidation centers, 30 depots, 100 super-distributors, 750 distributors, 2,400 stockists, 25,000 wholesalers and 1.4 million retailers.

Meanwhile, the CRM market in the counry—though in its nascent stages—is an area of high interest among both vendors and users. CRM will become more integrated with enterprise resource management (ERM), e-commerce, and supply chain automation (SCA) applications, thus driving the demand for all four.

With large organizations finishing off with their back-office integration and looking at optimizing the front office now, and most small and medium enterprises looking at customer retention as a focus area, the market is expected to grow rapidly.

Easwardas Satyan

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