Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
UNDER THE GUIDANCE OF Pratima Dabholkar BY Group No. 3 Kavyashree(24) Avradeep Mallik(28) Malavika Menon(29) Purbasha Panda(35) PGDM-IV-Finance
Contents
ENTERPRISE RESOURCE PLANNING: ......................................................................................................... 3 FMCG INDUSTRY MARKET: ...................................................................................................................... 4 ROLE OF ERP IN FMCG INDUSTRY: ........................................................................................................... 5 DABUR THE COMPANY: ......................................................................................................................... 6 SOME KEY FACTS: ................................................................................................................................ 7 DABUR WORLDWIDE: .......................................................................................................................... 9 EXPECTED FEATURES OF AN EFFICIENT ERP SYSTEM .............................................................................. 12 KEY STAKEHOLDERS IN ERP IMPLEMENTATION ...................................................................................... 13 BENEFITS OF ERP ................................................................................................................................... 15 IT INITIATIVES .................................................................................................................................... 17 UPCOMING CHALLENGES................................................................................................................... 17 Sample Report: .................................................................................................................................. 18 CONCLUSION:........................................................................................................................................ 18 REFERENCES .......................................................................................................................................... 19 FIGURES: Figure 1:ERP Systems Architecture .......................................................................................................... 5 Figure 2:Various products under Dabur ................................................................................................... 7 Figure 3:Category contribution to ccd ...................................................................................................... 8 Figure 4: Dabur international reach ......................................................................................................... 9 Figure 5: Sample reports........................................................................................................................ 18
4. Projects Costing, billing, expenses. 5. Human Resources Payroll, benefits, training. 6. Customer Relationship Management (CRM) Sales and marketing, commissions 7. Data Warehouse, Reporting, Data Mining
Also, traditional product lifecycle management is being challenged with the frequent introduction of new products and services with shorter lifecycles and a focus on brand extension. All of the above is placing intense pressure on conventional manufacturing and supply chain practices.
Such an example in the FMCG sector is Dabur.Dabur implemented ERP in year 2001. The project was named Project Synergy and it worked on two ERP systems: For the outbound logistics it runs QAD ERP suite known as MFG/PRO. For manufacturing locations, there was BaaN. By 2005 Dabur started to feel the pinch of maintaining two independent ERP systems. They were facing issues like maintenance costs, data redundancy, etc. So, in April 2006, they migrated from standalone ERP systems - Baan and Mfg to centralized SAP ERP system for all business units (BUs).
Europe and Russia. Dabur's overseas revenues stand at over Rs 500Crore in the 2008-09 fiscal, accounting for about 20% of the total turnover. The 125-year-old company, promoted by the Burman family, had started operations in 1884 as an Ayurvedic medicines company.
Products marketed in over 60 countries Wide and deep market penetration with 50 C&F agents, more than 5000 distributors and over 2.8 million retail outlets all over India Consumer Care Division (CCD) addresses consumer needs across the entire FMCG spectrum through four distinct business portfolios of Personal Care, Health Care, Home Care & Foods Master brands: o o o o o Dabur Ayurvedic healthcare products Vatika Premium hair care Hajmola Tasty digestives Ral Fruit juices & beverages Fem Fairness bleaches & skin care products
DABUR WORLDWIDE:
Dabur's mission to popularise a natural lifestyle transcends national boundaries. Today, there is growing global awareness about alternative medicine, nature-based and holistic lifestyles and an interest in herbal products. Dabur has been in the forefront of popularising this alternative way of life, marketing its products in more than 60 countries all over the world. Over the years, Dabur's overseas business has successfully transformed from being a small operation into a multi-location business spreading through the Middle East, North Africa, West Africa and South Asia. The chart below shows the operations of Dabur in the world market.
10
Currently, Dabur Company did demand forecasting internally with little or no direct liaison with the organisations customers. In fact, sometimes forecast information is not even shared amongst appropriate stakeholders internally, example, price promotions run by marketing without adjusting for inventory holdings or capability to deliver on the factory floor.
11
new approach allowed management to shift their focus from simple transactions to more strategic procurement efforts to reduce the cost. 3. Optimizing Daburs ERP capabilities With the existing two independent ERP systems, though the company was able to realize the operational excellence theinfrastructure for decision support was not adequate. The idea of a single organization wide ERP implementation was proposed in Dabur to improve the availability of data to the higher management for them to make decisions. Company needed to improve its capabilities in order to implement strategic and operational changes. 4. Leveraging IT for business initiatives Gathering real-time data is one of the biggest challenges for any FMCG company. Through the implementation of the ERP the company aimed at integrating their key customer in order to gather real time data which would further help them to forecast the demand more accurately and help them in making sales and distribution decisions swiftly.
12
2. Process the Majority of an Organisations Transactions The ERP system should cover as many functions of the organisation as possible, so that most of the organisation is brought under the umbrella of a centralised database system. 3. Use a Data Warehouse The ERP system should be capable of keeping an up-to-date database of all the important information flowing through an organisation, and all the information should be updated constantly, on a real time basis. 4. Accessibility The ERP system should be designed in such a way that any authorised employee of the organisation, regardless of which department he is employed in, should be able to access the information contained in the ERP database, from anywhere in the organisation.
13
2. Employees The next priority in the list would be the employees of the company. It has been observed that employees in an organisation are always less than receptive to ERP implementation in their company, because they are worried that their jobs and positions in the organisation would be in danger. Therefore, employees need to be given assurance that their services are still valuable in the company in order to ensure that their loyalty towards the company does not waver. 3. Customers The customers of Dabur are also involved because they would expect better service and products from the company now that it has implemented ERP software. So it is in the interest of the company to ensure that it meets the customers expectations. 4. Suppliers The suppliers of Dabur would also be interested in the ERP implementation program of Dabur because the information supplied to them regarding orders, materials and other production planning decisions would now be more accurate and timely. Accordingly, they can meet the orders in time and without any mistakes as to the quality, quantity, etc. of the goods to be supplied. 5. External Users External users refer to the shareholders as well as the potential investors in the company. This category of people would be interested in knowing how far the implementation of ERP in the company has been successful and whether it has achieved the results it originally set out to achieve. This knowledge might ultimately play an important role in their decisions regarding their investment in the company. 14
BENEFITS OF ERP
DABUR is one of those companies who have implemented two ERP systems successfully by streamlining its primary distribution system and outbound logistics. It has used both MFG/PRO and BaaN. MFG/PRO can run in an offline mode using local database and it is network independent which served as one of the major benefits of this kind of system.They were facing issues like maintenance costs, data redundancy, etc. So, in April 2006, they migrated from standalone ERP systems - Baan and Mfg to centralized SAP ERP system for all business units (BUs).MFG/PRO is a fully integrated ERP (Enterprise Resource Planning) solution, which includes manufacturing, distribution, customer service and financial applications and back-end system (Baan) for materials planning and production scheduling. Thus it helps create deliverable processes in the outbound logistics and seamlessly integrate it with strategic inventory management, credit control and sales generation. The major advantages can be summarized as: It helped them to improve the sales dispatch to the Carrying and Forwarding Agents (CFA). In an FMCG sector, the major chunk of sales happens at the end of the month. Thus over 80% of the sales happen during this period. Hence they faced a number of problems due to the sheer volume of the transactions and no system to keep a track of all these. Some of the problems would be like sales returns and cheque bouncing from pushed sales to meet sales targets. ERP helped them to remove all these glitches in their supply chain to make them into a more profitable organization. Improvement in collections. Collections have recorded an improvement of about 6 days and are more evenly spread over the month. This leads to considerable saving on working capital locked up in out-bound logistics. The collection improvement has also helped them to manage their
15
account receivables and thus more efficiently manage their working capital. In turn it has also helped them to reduce their bad debts. The ERP system has provided them with a platform for visibility of the data across all the domains in the organization. Thus the stocks with the CFA are visible to the central distribution planners in saleable and unsalable categories. This has helped them to better plan their distribution and management by reducing the sales returns and unsold stock inventory. In FMCG sector one of the major sources of income is the sale and promotion schemes. Without an ERP system it becomes very difficult to track the changes in this area especially when one is to monitor a base as huge as the whole of India. Thus the ERP system has helped towards the central management of the sales schemes. The schemes and free issues are now managed centrally at the corporate office and the ERP system keeps a strong check on schemes leading to reduction in misuse of schemes in the field. MFG/PRO gives real-time information sales situation of distributors,about their inventory and improves the accuracy of demand forecasts.These demand forecasts are then fed into the backend system (BaaN) for materials planning and production scheduling. Integration of these two systems has significantly enhanced their efficiency.Mfg Pro is fully operational in the zonal offices, motherwarehouses and CFAs and Baan is already live in five manufacturing locations. Information on inventories, return of products, collections done and dispatch orders from warehouses are now all available at a central location. A Secondary Sales System has been implemented to provide countrywide information on Secondary pipelines and sales by brand.This new Secondary Sales System has played an important role in tracking brand-wise sales, and reducing pipeline inventories by focusing on secondary sales. 16
The improvement in area-wise and brand-wise inventory management has scaled up the entire supply chain management through better sales forecasts, production scheduling, materials planning, vendor management and raw material sourcing.
Company has implemented another new initiative of Claims Settlement using an Intranet/ Extranet based system, for systematic tracking and settlement of claims. The Company also implemented another major initiative-Employee Management System (EMS), an intranet based HR-information system, including Payroll and PF processing.
IT INITIATIVES
Migration from Baan and Mfg ERP Systems to centralized SAP ERP system from 1st April 2006 for all business units. Implementation of a country wide new WAN Infrastructure for running centralized ERP system. Setting up of new Data Centre at KCO Head Office. Extension of Reach System to distributors for capturing Secondary Sales Data. Roll out of IT services to new plants and CFAs.
UPCOMING CHALLENGES
Forward Integration of SAP with Distributors and Stockists. Backward Integration of SAP with Suppliers. Implementation of new POS system at Stockist point and integration with SAP-ERP. Implementation of SAP HR and payroll. SAP Roll-out to Dabur Nepal Pvt. Ltd (DNPL) and other new businesses.
17
Sample Report:
CONCLUSION:
DABUR made a very right move to change into the existing ERP system. This has helped them not only to remain competitive in the market but also act as an example that even two models can be integrated together in spite of all the challenges faced by them. The ERP software has helped them to increase their profitability many folds since 2006.
18
REFERENCES
Simchi-Levi, Designing N Managing Supply 3E, Tata McGraw-Hill Education Alexis Leon, ERP Demystified http://www.dabur.com/Media-ProductShots http://russellobrien.hubpages.com/hub/ERP-Explained http://www.dabur.com/en/investors1/Annual_reports/2005-06/Dabur_Annual_Report_0506.pdf http://www.dabur.com/About%20Dabur-Dabur%20World%20Wide http://www.valuenotes.com/Investment-Strategy/Dabur-Long-term-outlook-remainsintact/172842/12540103.00/C http://provigator.com/dabur-india-limited http://www.chillibreeze.com/articles_various/Dabur-story.asp http://www.tspl.com/dabur_case_study.php http://www.dabur.com/About%20Dabur http://www.accenture.com/us-en/Pages/success-dabur-india-operational-excellencecompetitive-advantage.aspx
19