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Issue of May 2006 
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Enterprise-wide applications

A quick shot of ERP

Advantec Coils implemented an ERP solution in 33 days and was pleasantly surprised by the results

Advantec Coils (ACPL), a manufacturer of indoor units of split air conditioners needed to scale up its operational efficiency to support its growth targets. The goal was as ambitious as it was daunting. The company had to manage five operational manufacturing units (sixth coming up) and was heavily dependent on seasonal demand cycles.

Defying the traditional myth that ERP is only meant for large enterprises, ACPL chose to implement an ERP solution. It helped in effective inventory management and allowed the company to cater to seasonal spikes in demand

Defying the traditional myth that ERP is only meant for large enterprises, ACPL chose to implement an ERP solution. It deployed SSA Baan ERP IV in 33 days, which helped in effective inventory management and allowed the company to cater to seasonal spikes in demand.

Having already recovered almost Rs 8-10 lakh on its Rs 25 lakh investment within the first year of implementation, the company is looking forward to more returns in the future.

The Company

ACPL is an OEM supplier to vendors like Hitachi, Carrier, and Fedders, and has its own brand of indoor air conditioning units called Azure. The company operates in a highly competitive business environment, which is typified by seasonal demand patterns and high requirements during festivals.

The onslaught of competition from low-priced Chinese products had further increased the pressure to perform.

Issues with Tally

Prior to implementing ERP, the company used Tally for financial accounting and stand-alone software to automate the HR function.

However, according to Gurvinder Pal Singh, Director, ACPL, the level of automation was not robust enough to take care of the competitive environment as well as future growth.

Further, maintaining data security as well as the accuracy of facts, accounts, and inventory management was just not possible with Tally alone. Apart from these issues, the solution resulted in pile-ups of surplus inventory.

Without an effective enterprise-wide system the company was inclined to keep higher levels of goods in inventory, which were often not required, leading to inefficiencies and revenue loss. Due to the unavailability of even the smallest of components like a sticker, production could get delayed, adversely impacting the time-to-market.

On the other hand, maintaining excess inventory levels could be an expensive proposition considering the costs involved in holding inventory.

Key Requirements

What ACPL required was a solution that would help the company improve operations while remaining competitive by performing the following functions:

  • Effective allocation, planning and control of crucial resources of men, machines and material.
  • Well-tuned production environment with good synchronisation among the various units to enable adaptation to fluctuations in demand.
  • Effective cost control to be able to deliver better value to its customers.
  • Inventory visibility among various units and inventory reduction across the supply chain.
  • Availability of up-to-date and concise information to the top management to allow better decision-making.

These requirements, the company understood, warranted an enterprise-wide automation solution.

Why SSA Baan ERP?

According to Singh, while the need for an ERP was imperative, one of the key concerns was the time taken to adopt a new information architecture and the disruptions that could arise in an organisation’s operations. The fact that ERP has been notorious for time and cost overruns was bound to create apprehensions and influence the final decision. Especially so when ACPL had already deferred the decision to implement an ERP system earlier.

Yet, one of the company’s biggest compulsions was to plan production for the coming season. It needed a solution that would allow smooth and early adoption of a new system without compromising its functionality.

After considering several ERP solutions, the decision was taken in favour of SSA Baan ERP IV. According to Singh, the solution provided everything ACPL was looking for: robustness, close fit with business requirements, and cost-effectiveness.

Polaris was chosen for implementing the solution because of its extensive experience in SSA Baan ERP implementation and project management skills. Moreover, its ‘Speed’ framework promised to carry out the implementation in less than two months.

In A Nutshell
  • The company: Advantec Coils, a manufacturer of indoor units of split air conditioners, needed to scale up its operational efficiency with the goal of supporting its growth targets.
  • The need: Advantec required enterprise-wide automation to improve its operations and help the company remain competitive.
  • The solution: Implemented the manufacturing, finance, and distribution modules of SSA Baan ERP IV. The project was completed in 33 days.
  • The benefits: Replacement of disparate systems by a single system, effective inventory control and the inculcation of a disciplined approach leading to a more effective and efficient way of working.

Implementation Process

Polaris’ ‘Speed’ framework used in-built templates and pre-configured business processes that helped ACPL deploy the ERP system in 33 working days, including the training of users.

Keeping the ERP implementation in mind, the company procured two Intel validated servers—SE7501BR2 powered by Intel Xeon 2.40 GHz CPUs and running Windows 2000.

The company also connected its different locations through VSAT. These locations included all the four production plants in Bahadurgarh, Haryana, and the fifth plant in Jammu.

A Successful Implementation

Besides ‘Speed’, some of the other reasons for successful implementation were:

  • Short turn-around time for resolving issues as regular meetings involving top management of ACPL were held to sort out contentious issues.
  • Effective project management and coordination ensured completion of mapping and master data for remote sites like Jammu.
  • Some of the activities were carried out in parallel like data collection, which began at the initial phase with the involvement of second line users.
  • Proper documentation of processes ensured effective knowledge transfer.
  • Non-standard practices and procedures were streamlined and changed using SSA Baan ERP procedures, BPR, and change management techniques.
  • Effective and logical system-testing gave sufficient confidence to the company to switch over to SSA Baan ERP rather than follow the normal practice of using the legacy system simultaneously. This helped prevent duplication of data entries.

Modules of Solutions

The company implemented the manufacturing, finance, and the distribution modules of SSA Baan ERP IV.

The manufacturing module provides functionalities like Master Production Scheduler (MPS), Material Requirement Planning (MRP), Shop Floor Control (SFC), Production Planning (PP) and Control, and Capacity Requirements (CCR).

Under the Finance module, the solution delivers functionalities like General Ledger, Accounts Payable and Receivables, Costing, Budgeting, Fixed Receipts, and Taxation. The distribution module includes Purchase Control, Inventory and Sales and Marketing functions.

How ERP Helped

One of the most prominent benefits of deploying ERP at ACPL has been effective inventory control. The company is now able to maintain the right inventory levels for all its product lines so as to avoid both over and under availability of stock.

According to Singh, Rs 8-10 lakh of the Rs 25 lakh invested on the deployment process has already been recovered within the first year of implementation itself—mostly on account of proper management of inventory levels.

Inventory visibility across the various units has also helped make better-decisions and meet commitments to customers.

“Another key realisation with ERP has been the inculcation of a disciplined approach leading to more effective and efficient way of working. The company is now able to meet its delivery deadlines well on time in order to be able to take the lead over its competitors,” said Singh.

What Lies Ahead

As the system stabilises and once the required data is generated, the company hopes to start utilising the system for generating intelligent analysis reports like understanding demand patterns in the market, and specific patterns of demands from its OEM partners.

 
     
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