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 companys troubles begin to multiply.
Many of Indias 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. ITCs 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.
To track every bale of tobacco leaves from the point
of origin to the end product, ITC implemented an ERP system that is updated
using handheld terminals from 70 rural locations in Andhra Pradesh and
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.
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.
|1.3 million units per annum being transacted five
times on an average are tracked by the ERP and Handheld system we put in
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.)
Blueprinting the bow
Even before they started the project, it was important
to get a buy-in at both grass-root and senior levels. The team achieved
this buy-in by means of effective communication and focussed meetings
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 teams 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, ILTDs 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 companys
subsidiaries. However, much credit goes to the companys 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.
ITC ranks fourth in the Indian profit-making companies.
It has a turnover of approximately USD 2.6 billion. ITC's India Leaf Tobacco
Development (ILTD) Division is the largest buyer, processor and exporter
of tobacco in India.
ILTD Division needed a system that could be used to
track every bale of tobacco from the point of purchase to the point of
At the core it chose to deploy Oracle e-Business Suite
11.5.9, that is updated via custom-built handheld terminals, which use
the 802.11b Wi-Fi standard and Ku band VSATs to transmit information to
the core ERP system.
- The errors in data capture have been minimised
- The process is much more efficient due to
the consolidation of resources
- The company has added an R&D module that
will help it in the long run
- The project has also been beneficial to the
people involved in the process, because it has brought connectivity
and education to isolated regions in Andhra Pradesh and Karnataka.
Deepali Gupta can be reached at