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ERP up-and-running in 70 days

TEI Technologies, an SME, implemented iBaan in 70 days without major hiccups. Let's read it to believe it. by Rahul Neel Mani

TEI Technologies was instructed by its joint venture partners, Tyco Electronics and Elentec of Korea, that it had to operate at a lower cost in order to maintain sustainable margins. "We were asked to curb expenditure and build our assets as we grew," said Sethumadhavan I, CEO, TEI Electronics.

After a lot of planning and consideration the company decided to implement the ERP from Baan. And by following a rigorous deployment and management schedule, the company went live with the ERP in just 70 days.

The need is business

"We want to be the biggest component supplier in the consumer electronics segment in India," said Sethu. The company manufactures various types of electrical and electronic connectors, inductors, wiring harness, PCB assemblies, and remote controllers. And these are supplied to companies that manufacture consumer electronics, computers, and home appliances. TEI Technologies' customers include Sony, Videocon, Onida, Samsung, Samtel, Salora, and HFCL.

In line with the nature of the business, inventory management was important for the company's success. This was because most of the production operations were assembly-related, in which lots of organized data was required all the time.

Traditionally, the electronics industry is plagued with the issue of obsolescence of material, since product designs change regularly. "Not even five percent scrap value is assigned to the obsolete material," informed Sethu. "So, the need for inventory and materials management justified the requirement of an ERP system."

Other needs

An important need was to integrate the design components of Elentec with that of Tyco Electronics.

Some of the company's customers like Samsung were adopting concepts of 'Just in Time' information. These customers insisted that the TEI information be updated directly into their servers.

There were many small sub-contractors to whom the company assigned non-core manufacturing tasks. Information regarding these sub-contractors had to be stored in an organized way. "A sound and robust database, and an ERP solution were the needs of the hour," said Sethu.

Initial infrastructure

In the beginning, TEI Technologies offered 64 Kbps

ISDN Internet access and e-mail facilities to all employees. Financial accounting packages like Tally, and software for other applications like payroll were also used.

There was no connectivity between Tyco Electronics and Elentec in Korea.

Solution seeking

"We considered a few tailored packages along with offerings of the big brands, and almost decided to purchase a small tailored application," informed Sethu. He however decided against the purchase because the indigenously developed packages could only meet the current requirements.

The company then, had just set up its core LAN infrastructure and expected it to grow. It was thus very important to use a robust ERP solution, which could meet demands in future as well.

The company decided on Baan because it felt that Baan was a robust, cost-effective, and well-fitting business solution for its SME environment. A number of concerned department heads were taken into confidence before zeroing in on Baan. The heads were from departments like materials, engineering, finance, manufacturing, planning, and customer support. Each department head wanted to study the functionalities of the package from his or her perspective.

The company expected 70 percent growth in terms of volumes over the next few months. In such a scenario, scalability and ability to upgrade were crucial factors when selecting the ERP.

A disciplined implementation

Sethu believes in quality management systems. "I believe that a system can be easy to implement, but quick to become obsolete if not reviewed constantly. And to go by that belief, he along with the top management thoroughly reviewed the procedures of implementing all IT projects in the company. The implementation team sat together to decide the implementation plan in September 2002.

There was however a concern. Company sales were expected to shoot up due to the approaching Diwali festival and cricket World Cup, scheduled in February. This was because, the sale of Color Television sets were expected to rise sharply and TEI Electronics had to supply remote control sets. The concern was that, the company could not afford any delays or system downtime due to the implementation of ERP.

"Keeping all this in mind we set a very ambitious target to complete the implementation within three months," said Sethu. The company knew that even a small delay could postpone the deadline.

To ensure better coordination, the members of the implementation team were requested not to take leave till the implementation was over. The company's personnel were instructed that data should be collected in a format prescribed for Baan. "And we circulated the data collection formats to the key users," said Sethu.

Moving to live

The team planned to start implementation on October 03, 2002 and go live with Baan IV c4, on January 01, 2003 without any cost and time overruns. And the top management was very proactive and eager to move the implementation process at a fast pace. Polaris was chosen as the implementation partner as they had a lot of expertise in implementing Baan.

The implementation team reported to work at 8:30 AM. They performed their routine business activities till 10.30 AM, after which they dedicated time for the ERP project. "Sometimes the personnel spent time on the project even after lunch," said Sethu.

The company decided that the department heads would be the key users of the ERP, and were given full powers to take decisions. "This was because the department heads knew the practical problems and had better understanding of the daily operations," explained Sethu.

A lot of customization was required to suit the company's needs. "Some of the department heads requested customization in the modules, and it was done promptly. Some modules did not need changes," said Sethu.

The 70-day deed

Baan went live at the end of 70 days with a big-bang approach. "And this was probably the fastest Baan implementation in India," said Sethu.

During the seventy days of implementation, the entire database was fed into the ERP system so that the users could access it.

A few Implementation woes

There was a mismatch between Baan's capabilities and the company's requirements. "There were users who didn't want to change the standard practices and insisted the solution be re-modeled instead," said Sethu.

The time of the year for implementation was slightly busy. The festival of Diwali was coming up, followed by the cricket World Cup. Both events boosted remote control sales for TEI Electronics. The situation was resolved because all personnel worked with extra vigor on their jobs, with even Sethu pitching in a hand with the implementation.

Bag-full of benefits

The company has been using Baan for over nine months now, and has received a number of benefits.

The transaction processing time has reduced substantially. Earlier it took 10 days for supplier delivery information to reach the finance department. Now it takes much less. Production planning can now be performed based on forecasts made from customer data. This helps plan manpower.

"We can now perform materials-planning to help optimize inventory levels. The system also provides online details of material consumption," said Sethu.

Users have benefited by the automation of import processes. They can view the inventory and its value anytime. This has lead to visibility of raw material, and finished goods inventory.

Users are also able to perform real-time tracking of material pricing and usage variances "And throughout the company, the amount of paperwork has decreased, and efficiency has improved," explained Sethu.

Road for future

The company will continue to embrace better and efficient IT tools to maximize the returns from the ERP, and lower the TCO in a realistic manner. The immediate task is to implement a radio link instead of a terrestrial link for Internet connectivity. Connectivity between the company and its key suppliers for using Baan will be considered.

"We will request the management of Tyco and Elentec to allow us to connect to their systems. This will give us access to innovative information on developing new technologies and products," says Sethu.

The company plans to upgrade its systems and introduce value additions in the ERP. "Along with increasing the number of licenses from the current figure, we are moving fast towards being a Six Sigma complaint company. This will bring the delivery time of products down further," said Sethu.

Rahul Neel Mani can be reached at: rahul@expresscomputeronline.com

Making the most from Baan
TEI implemented the following important functionalities with Baan IV c4:

Manufacturing

  • Master Production Scheduling
  • Material Requirement Planning
  • Engineering Data Management
  • Quality Management System
  • Shop Floor Control

Distribution

  • Purchase order, requisition control, imports, and valuation of imported purchases at landed cost net of CVD
  • Sales control, exports
  • Inventory control, location and lot control Finance
  • General ledger, accounts receivable and payable, and cash management
  • Multi-finance multi-logistic set up with independent logistics and finance
  • Multi company consolidation
  • Segment reporting by line of business
  • Automation of excise, sales tax and TDS processes and returns
  • Tracking of efficiency and material usage and price variances

In a nutshell
The company

TEI Electronics, a JV of Tyco Electronics and Elentec of Korea manufactures components like electronic connectors, PCB assemblies, and remote controllers for electronics manufacturers. Its customers include Sony, Videocon, Onida, and Samsung.

The need

The management had to operate at a lower cost in order to maintain sustainable margins. It had to curb expenditure and build its asset

base. It decided to deploy an ERP from Baan, and had to implement it very quickly.

The solution

The ERP from Baan was implemented in 70 days, with a lot of effort from the implementation team and support from the top management.

The benefits

The company enjoys a number of benefits like reduction in transaction processing time, ability to perform materials planning, optimized inventory levels, and automated import processes.


IT at TEI Electronics at a glance
LAN: Wirelink 10/100 Ethernet LAN

Internet connectivity: 64 Kbps ISDN link (Radio Link proposed)

Servers: ERP/file - Windows NT, mail server - Red Hat

Anti Virus: McAfee

ERP: Baan IV c4

Database: MS-SQL Server


 
     
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