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Escorts Limited's, Agri Machinery
Group had deployed Avalon's ERP systems and faced challenges
like inability to upgrade, lack of vendor support, and
buggy software. It used tools from the Oracle 11i suite
and now performs its critical operations with better
productivity levels. by Shipra Arora
Escorts Limited's
Agri Machinery Group (EL-AMG) manufactures agricultural
machinery, and has four manufacturing plants in Faridabad.
It manufactures three lines of tractors, imports and
sells various other farm equipment, and consequently
accounts for around almost two-third of Escort's revenues
(Rs. 900 crore in FY 2002-2003). The use of an ERP thus
plays a significant role in the business operations
of this busy manufacturing company.
EL-AMG had already
deployed ERP systems from Avalon, but was plagued with
a number of challenges. The company was unable to draw
a future roadmap and upgrade its technology. And to
make matters worse, the ERP vendor Avalon had shut shop
in India. This prompted EL-AMG to look for an alternative
enterprise applications solution for its business. As
a solution, it deployed a number of modules of the Oracle
11i suite of products and can now make better and more
informed decisions, and enjoy a bug-free software performance.
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The company
Escorts Limited's Agri Machinery Group (EL-AMG)
manufactures agricultural machinery, and has four
manufacturing plants and an R&D center in
Faridabad.
The need
The company used an ERP from Avalon which did
not allow the company to upgrade technology. And
the vendor shut down its office in India, cuttingoff
support.
The solution
The company deployed a range of tools from the
Oracle 11i suite like Oracle Financials, Oracle
Discrete Manufacturing, Oracle Purchasing, Oracle
Order Management, Oracle Workflow and Alerts,
and Financial Analyzer (OFA).
The benefits
The company was able to perform better workflow
processes, easier generation of MIS reports, bug-free
performance of systems, and timely closing of
accounting cycles.
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Escorts Agri Machinery
Group
Click on image for larger view |
Business challenges
Despite using an
ERP, the toughest challenge was the inability to draw
a future roadmap by leveraging the latest technologies.
This was impeding the scope for future growth. The company
could not leverage the benefits of the Internet by offering
e-commerce and other Web initiatives. Since the Avalon
ERP could not be Web-enabled. To make matters worse,
Avalon had shut shop in India, shutting down chances
of upgrades and making use of the latest technology
developments.
"The Avalon ERP
system had outlived itself and had become a dead product,"
said Vinay Mehta, IT Head, EL-AMG. The product had inadequate
documentation, which made maintenance very difficult.
It was a headache to incorporate frequent changes in
the application.
EL-AMG also had
to deal with the problems of software bugs, which could
not be resolved due to lack of proper documentation.
The company feels that the bugs appeared due to over-customization
of the product. The central systems department, which
took charge of applications maintenance, spent most
of its time tackling these bugs.
The system was
not very user-friendly. The users were not able to run
queries on their own. The responsibility of running
the large amounts of queries and reports was delegated
to the central systems department. This created a huge
backlog of work.
EL-AMG also had
a certain amount of legacy, which included i2 SCM, demand
planner, factory planner, warehouse management software
for the spare parts division, HR and payroll applications,
after-sales and warranty systems, and Auto-Matrix Exchange
for collaboration with vendors. The group wanted an
end-user-driven system that would empower the users
and allow them to run their own queries, reducing the
burden on the systems department. This made the company
decide to implement a new ERP system, which could take
care of the future growth strategies of the company
and provide the needed functionalities.
Choosing the ERP system
In early 2001,
EL-AMG began to look for a new ERP system to replace
the existing one. The company chose Oracle among other
vendors keeping in mind the organization's functional
and technical requirements. Since the ERP project was
very significant for company, it was named, 'Pragati'.
A lot of time was
spent in planning and deciding upon the right software.
And the entire proceedings were conducted in an elaborate
and phased manner to ensure efficiency.
The company laid
down three ground rules for vendors willing to participate.
They were:
- The vendor had to conduct
a three-month Business Process Re-engineering (BPR)
exercise at EI-AMG.
- The ERP vendor would be
the technology implementation partner and handle the
sole responsibility of the project.
- The ERP systems had to integrate
seamlessly with the company's legacy software systems.
An important highlight
in the selection process was the involvement of end
users. A team of around 70 members was created during
evaluation. Almost 80 percent of the members belonged
to functional areas. The rest were from the IT department.
"This was a key
learning from the earlier ERP implementation, which
was largely IT-driven. If the selection process is not
end-user-driven, you'll have a hard time convincing
users about the benefits. In our new ERP implementation,
we made sure that it was the choice of the end users,
so that they accepted the decision easily," explained
Mehta. The Gartner group was also involved in providing
consultancy at each stage.
Each member of
the team gave ratings to the vendor. The evaluation
was finally done on the following criteria:
- Functionality
- The ability to integrate
third party software
- Type of feedback from existing
user base (through visits to other company's ERP sites)
- Presence in India
- Localization of modules
- Cost
- Time taken to implement.
In March 2002,
Oracle was chosen for the applications, an Accenture
was chosen to conduct the BPR exercise.
Implementing 'Pragati'
The rollout of
Oracle's products began in March 2002. EL-AMG is present
in five locations, which comprised four manufacturing
plants and an R&D setup, all within distances of
three Km in Faridabad.
The company decided
upon the 'big bang' approach to implementation in the
five locations. It went live on Oracle 11i in March
2003. The modules implemented were Oracle Financials,
Oracle Discrete Manufacturing, Oracle Purchasing, Oracle
Order Management, Oracle Workflow and Alerts, Financial
Analyzer (OFA), Purchasing and Manufacturing Intelligence,
Teleservice, iReceivables, and Oracle Treasury.
An important set
of exercises during implementation was on data cleansing
and migration. Earlier, different finance divisions
used various items, parts, and vendor codes. With the
unification of the different divisions, standard codes
were created for simplification and more efficiency.
The data was taken from legacy system and the coding
scheme was revamped.
Reporting and MIS
systems had different formats and had to be revamped.
The Bill of Materials (BOM) systems also had to be re-done
during implementation.
The company network
The heart of the
network is at the second plant (Plant 2) in Faridabad.
Around 40 servers, some of which are PCs configured
as servers, act as a centralized system. The servers
range from NT, Windows 98, Windows 2000 to Linux and
Solaris.
A set of four HP
severs (HP-Ux 11i) run the core Oracle application modules.
These are connected to a SAN box. The other three plants
and the R&D locations connect to these servers through
2 Mbps leased lines. The area offices are able to connect
to the servers located in Plant 2 through a VPN provided
by HCL Infinet using a PSTN dial-up.
BPR
"If one goes for
an ERP without BPR, there is a chance the company will
miss out on a lot of benefits of BPR," said Mehta. The
BPR exercise was closely aligned with the ERP implementation,
ensuring that 'best practices' were incorporated. Accenture
was involved in defining the re-engineered processes
and convincing the end users of the future benefits.
Oracle's role was to map the processes into their products.
The processes involved
in re-engineering included finance, procurement, materials,
plant maintenance, and quality assurance.
How the new tools
helped
A significant benefit
of the new Oracle-based systems was the resolution of
the problems with present in the earlier Avalon ERP.
Due to the bugs, the company could not use its database
(Oracle) for generating any meaningful MIS. So, the
MIS for the top management was generated through Excel
sheets instead of being generated directly through the
system.
With 11i, the MIS
is generated through the system and standard reports
are created. Currently, there are around 250 reports
generated for the middle management and operational
people.
The company has
also deployed Business Intelligence (BI) tools from
Oracle for the top management. While earlier the focus
was on the middle management and operational personnel,
the present focus is on the top management so that they
can perform informed planning and better decision making
activities.
With the help of
the new tools, the company was able to shorten the time
taken to close the annual accounts. It was able to close
the year end accounts of FY 2002-2003 within two months,
an improvement from four months time taken earlier.
By next year, the company hopes to bring the time taken
down to one week. It is also able to close the accounts
each month by the first week of the next month.
At any time the
company is aware of its inventory status. According
to R.K. Jain, Dy. General Manager, AMG (Information
Systems), there has been elimination of a lot of non-value
added activities as well, translating into benefits
for the group.
ROI
The company feels
that it's a little early to calculate ROI, and the results
are already visible in the lowered inventory value.
According to Mehta, the system has already brought down
the value of inventory by around 30 percent. There has
been substantial savings in terms of inventory and manpower
resources.
The future roadmap
Within the next
three months, the company will extend its ERP system
to its area offices, which number 25. It will roll out
the ERP to 15 nationwide depots. And will implement
product data management systems. It will also integrate
its R&D systems, designing, and product development
systems in the plants in the next few months.
Shipra Arora can be
reached at shiparora@yahoo.com
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