Transforming tobacco collection

ITC's Project Dhanush combines a central ERP implementation with remote handheld terminals to bring enormous benefits to the company and tobacco farmers in South India. by Deepali Gupta

Capturing data in urban India is quite straightforward. It is when you go upcountry and beyond into the hinterland that a company’s troubles begin to multiply. Many of India’s biggest businesses have their roots in inaccessible rural areas where raw materials are produced, but which are under-equipped with phone lines or any other sort of communication. ITC’s India Leaf Tobacco Development (ILTD) Division is one such business that operates in a rural setting while catering to international customers.

Every bale of tobacco leaves ILTD buys at an auction must be trackable to its point of origin should there be a problem in the end-product, or for repeat orders. To this end, ITC implemented an ERP system that is updated using handheld terminals from 70 rural locations in Andhra Pradesh and Karnataka.

Track that bale

The need was for an ERP system to store data which would enable shipped tobacco bales to be tracked back to the farm from where they came. “We are talking about 1.3 million units per annum being transacted five times on an average,” says V V R Babu, CIO of ITC.

ITC deployed Oracle e-Business Suite 11.5.9 which captured all the transactions at a Stock Keeping Unit (SKU) level for ILTD. The ERP system was suitable for inventory management and a few other areas of business, but there were some gaps. For R&D, ITC implemented Sapphire; for export documentation it used an Export Management System, and for payroll and attendance it used Power Apps. This implementation is internally referred to as a best-of-breed, bolt-on system to a standard ERP.

The central database of the ERP system lies at Bangalore. It is accessed through a 150 Mbps VPN connecting 384 locations across the country.

Tobacco leaves are collected in rural AP and Karnataka. Downstream, ILTD buys bales of tobacco from auction platforms. These bales are stored in aggregating godowns or at outside handling points before being sent to various green leaf threshing plants. Before the ERP implementation, the head clerk at the aggregating godown had to enter over 3,000 records a day covering every bale. The data entry process would be repeated at every checkpoint. Not only was this tedious, it was also prone to stock reconciliation errors.

Extend it

V V R Babu, CIO, ITC

ITC decided that it would be simplest to get data entry done during collection at each checkpoint. By doing this, it distributed the work among several people, and discrepancies in reconciliation would be reduced. However, most collection points were not connected even by the telephone. ITC then opted to go wireless. They gave their field staff custom-built handheld terminals (HHT) with in-built barcode scanners and Wi-Fi 802.11b support running Palm OS. The data synchronising application was developed using AppForge.

At the point of purchase a person puts a unique barcode on each bale. Then at every checkpoint attendants scan the code and feed in incremental information that captures every transaction at the SKU level. The data is sent to a remote PC connected to the Wi-Fi access points placed at the auction platform, the aggregation godowns, the threshing plants and the redrying units. This PC uses a Ku-band VSAT to route the updated information to the Oracle 11.5.9 database that converts SKU level to an inventory record of the processing the bale has undergone. By the end of this process, ILTD has a bar-coded inventory of approximately 500,000 packages. (See diagram.)

ITC’s ILTD Division - Information architecture

Blueprinting the bow

The project began in November 2002 when the ILTD Division laid down its blueprint before the Corporate IT Strategy Committee of ITC. Then came vendor evaluation, product evaluation, proof-of-concept and onsite visits. ILTD got its first clearance in June 2003. The project began in August 2003, and eight months later the organisation completed a full-scale deployment. The implementation spread across 70 remote areas of Andhra Pradesh and Karnataka that lacked basic infrastructure and wide area connectivity.

Even before they started the project, it was important to get a buy-in at both grass-root and senior levels. At the base the team achieved this buy-in by means of effective communication and focussed meetings that made users conscious of the impact the implementation would have on the company and its goals. Convincing the management required a demonstration of the team’s commitment to the project. “To prove that, the department pulled together talented people in a cross-functional full-time project implementation team,” says Murali Ganesan, ILTD’s Finance Controller. A divisional ERP review committee and a divisional IT steering committee were set up to monitor progress.

All or nothing

ILTD took a big-bang approach to ensure widespread adoption of the system. It attributes some of its success to the close coordination between the department and the Shared Service Team that oversees IT implementations in the company’s subsidiaries. However, much credit goes to the company’s training efforts that familiarised mostly uneducated rural folk with HHTs. The staff assisting at checkpoints is unskilled. ITC put in 25,000 man-hours in the training process that enabled the support staff to optimally use HHTs. Most of this data entry work is now outsourced.

Pros and cons

The project has had both benefits and benign side-effects. The obvious advantages are that it is much easier to trace products, and information is readily available for decision-making. Lags, gaps and information mismatches have been eliminated for the greater part. The process has been highly improved, and integration and consolidation have been simplified. The scalability of the new system is substantial, and it adds an R&D and crop development module that will help the company grow in the long term. The system is available any time anywhere because it is Web-enabled, and due to the centralised architecture there is no resource redundancy.

The project has had more than just business benefits. Rural communities in areas where Dhanush has been deployed are better connected as ITC has set up its own Wi-Fi network and transmitting towers. It has brought a certain level of education, and finally, by means of disseminated knowledge, it has empowered the local farmers to maximise returns on what they grow.

Deepali Gupta can be reached at

deepali@networkmagazineindia.com