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."
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.
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.
"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,"
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,"
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
Rahul Neel Mani can be reached at: email@example.com
| TEI implemented the following important functionalities
with Baan IV c4:
- Master Production Scheduling
- Material Requirement Planning
- Engineering Data Management
- Quality Management System
- Shop Floor Control
- 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
- 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
| 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 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 ERP from Baan was implemented in 70
days, with a lot of effort from the implementation team and support
from the top management.
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.
| 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