Fi el d W or k ofERP I m pl em ent at i on Pr ocess

Presentati on by D evendra Supri ya Sni gdha Arvi nd Pari kshi t 43 47 19 27 16

Introduction
Tata Ryerson is a 50:50 joint venture between Tata Steel and Ryerson Tull of the US which manufactures hot and cold-rolled coils, strips, plates, sheets and blanks. Head quartered in Kolkata Manufacturing facilities in : Jamshedpur, pune Distribution points: Howrah, Pune, Jamshedpur, Faridabad, Chennai, Raipur and Bangalore. Plans to open 50 new sales offices by 2006. The company went live with SAP in 1997.

ERP History

SAP pr ovi des: I nvent or y and st ockyar d m anagem ent Sm al ll ot del i ver i es Just I n Ti m e suppl i es. Tat a Ryer son has upgr aded i t s ERP package t wi ce i nt he past seven year s as a r esul tt he com pany has gr ow n f r om 10 cr or ei n 1999 t o 335 cr or ei n 2004 and i t st r ansact i on has doubl ed i nt he past 2 year s.

SAP: The Package of choice

Tat a Ryer son under t ook a eval uat i on exer ci se t o sel ect on R/ 3 3. 0 F ver si on. The cor e package had sal es and di st r i but i on,m at er i al s m anagem ent , f i nance, pr oduct i on pl anni ng and appl i cat i on l i nk enabl i ng m odul es. I t had w el ldevel oped quer i es,r epor t s and gr aphi calpr esent at i on of dat a.

The need for localization

Tat a Ryer son upgr aded f r om Sap R/ 3 3. 0F t o R/ 3 4. 0B 3. 0 ver si on l acked l ocal i zat i on f eat ur e such as exci se r epor t i ng and enhanced sal es t ax f eat ur e sui t ed t oI ndi an m ar ket . 4. 0 ver si on enabl ed t o sm oot hl yi nt egr at e Tat a St eel s SAP and Tat a Ryer son s ERP.

Evident Results

Tat a Ryer son added subst ant i alval ue t o m at er i al s suppl i ed by Tat a St eelbef or ei ti s di spat ched t ot he cust om er . R/ 3 4. 0 Ver si on hel ped t o shar ei nf or m at i on about t he m at er i al s and cust om er s onl i ne. I t al so enabl es shar i ng of al ldocum ent sf r om Tat a St eel s SAP syst em w hi ch accom pany t he m at er i alw hen i ti s shi pped.

Enterprise Upgrade

Pr oduct suppor t w as no l onger avai l abl e f or 4. 0 ver si on. Tr ansact i ons vol um e w er e doubl i ng year on year . Change ofcom pl et e har dw ar e i nf r ast r uct ur et o handl el ar ge scal e t r ansact i ons. Hence t hey deci ded t o adopt SAP R/ 3 4. 7 Ver si on.

Handling the Blackout

Bef or e goi ng l i ve w i t h 4. 7 ver si on t he ent i r e appl i cat i on and devel opm ent al ser ver had t o be shut dow n f or 48 hour s. Dur i ng t hi s per i od t he com pany had t o ensur et hat t he syst em i s up and r unni ng and i s not af f ect i ng t he busi ness.

Business Gains

The Q uant i t at i ve goal s of t he com pany w er e achi eved w i t h I ncr eased ef f i ci ency of busi ness pr ocesses I m pr oved pr oduct i vi t y Reduced Cost s O pt i mi zed w or kf l ow Reduct i on i n er r or s Tr ansact i on speed w as accel er at ed m any f ol d because of avai l abi l i t y of r ealt i mei nf or m at i on

Business Gains (Contd.)

Cust om er s coul d quer yt he quant i t y of m at er i alavai l abl e at a par t i cul ar t i m e and pl an t hei r pr oduct i on and schedul i ng f l exi bl y. Com pany coul d change t he pr oduct i on cycl e as per cust om er r equi r em ent s at any gi ven t i m e w hi ch t r ansl at ed i nt oi m pr oved cust om er ser vi ce and qual i t y cont r ol .

Future Rollouts

Tat a Ryer son i s pl anni ng t o br i ng i nt ot he ERP syst em i t s 10 new l y opened of f i ces. I ti nt ends t oi m pl em ent t he Hum an r esour ce and Payr ol lm odul es of ERP package and l ooki ng f or an appr opr i at e par t ner . Al so t hey m i ght consi der t he CRM and SCM packages I ncase VAT com es i nt o pi ct ur et hi s ver si on w oul d need t o m ake onl ymi nor changes t ot he exi st i ng exci se m odul e.

IT INFRASTRUCTURE AT TATA RYERSON

I NDUSTRY

St eel : hot and col dr ol l ed st eelcoi l s, st r i ps, pl at es and sheet s

Pr oduct i on Ser ver : HP M L570 w i t h Pent i um I I I Devel opm ent Ser ver : HP DL 380 SAP R/ 3 3. 0 F upgr aded t o R/ 3 4. 0 B and l at er t o R/ 3 4. 7 Wi ndow s 2000 Or acl e 9i Tat a Technol ogi es,Pune

HARDW ARE

SO FTW ARE O PERATI NG SYSTEM DATABASE I M PLEM ENTATI O N PARTNER CO ST

Rs 3, 47, 50, 000

Questionnaire
1. 2. 3.

Which ERP solution are you using? SAP R3 4.7 version When do you started using this ERP system? 1997 What made you think to go for ERP solution (need for ERP solution)? For better inventory and stock management To differentiate itself through product and service quality Integrate various units throughout the country Lack of real time information resulted in inefficient management of working capital

4. 5.

Are you using readymade ERP or custom build ERP? Ready made Why do you went for readymade or Custom ERP? The need for localization such as exercise reporting and enhanced sales tax features. Better integration with Tata steels SAP system. What was the average amount of investment in terms of hardware, software, networking, consulting and training expenses etc? : Rs. 3,00,00,000 : Rs. 2,50,000 : Rs. 45,00,000 : Rs. 3,47,50,000

6.

ERP Package implementation of R/3 3.0 F Version Upgrade to version R/3 4.0 B Upgrade to version R/3 4.7 Total

7. 8.

How long the implementation duration of this work was? 8 Months Was there any cost overrun and time overrun for ERP module and why (if any)? No What are the problems faced during implementation? What were the change management issues? Handling of black out for 48 hours. Training for employees.

9.

10. Was there any retrenchment of employees, if yes, in how many numbers? No 11. Business Process Reengineering was done before ERP implementation or it was done as per ERP package? BPR led ERP implementation.

12.

What are the benefits received by the organization after ERP implementation? Company growth from Rs 10 crore in 1999 to Rs 335 crore in 2004. Its transaction has doubled in the last 2 years. Increases efficiency of business processes Improved productivity Reduced costs Optimized workflow Reduction in errors Availability of real time information accelerated transaction speed. Flexible production and scheduling plans Change in production cycles as per customer requirements at any given point has improves customer service and quality control.

13. What is the technology platform used for this system? Hardware: The production server is a HP ML570 with a Pentium III Xeon processor, a 240 GB hard disk and 2.4 GB of memory. Operating System : Windows 2000 Database : Oracle 9i Implementation Partner : Tata Technologies.

Nestle SA
An ERP odyssey

History

Nest l e SA i s a Sw i t zer l and based consum er goods gi ant t hat w ant ed t o use SAP syst em t o hel pi n cent r al i ze 200 com pani es and subsi di ar i es i n 80 count r i es. I t had si gned a m uch publ i ci zed $200 m i l l i on cont r act w i t h SAP and an addi t i onal $80 m i l l i on f or consul t i ng and m ai nt enance t o i nst al lan ERP syst em f or i t s gl obalent er pr i se.

ERP Odyssey
Nestl's global SAP project, which is tied in to a larger $500 million hardware and software data center rehaul, will be integrated with its American subsidiary's soon -tobe completed ERP. In 1997, Nestle USA, the Glendale, Calif.-based company embarked on an SAP project code-named Best . Best took 6 years for implementation completion and cost around $200 million. The last rollouts were in the first quarter of 2003. To date the Best project has saved the company $325 million.

The Problems faced by Nestle USA

An gr y em ployees E x pen s i ve r een gin eer i n g L on g per iods of w ait i n g R es is t an ce t o ch an ge

The Problem: 29 Brands of Vanilla

B efor e 1991, Nes tl was s imply a collection of independently oper ating br ands , s uch as S touffer 's and Car nation, owned by the S wis s bas ed par ent. I n 1991, the br ands wer e unified and r eor ganiz ed into Nes tl US A. Divis ions s till had geogr aphically dis per s ed headquar ter s and wer e fr ee to make their own bus ines s decis ions T he new company was tr ying to intr oduce economies of s cale and common pr actices , but year s of autonomous oper ation pr oved an almos t ins ur mountable hur dle.

 Among many other tr oubling r edundancies , that Nes tl US A's br ands wer e paying 29 differ ent pr ices for vanillato the s ame vendor T he r eas on was becaus e ever y divis ion and ever y factor y got to name vanilla whatever they wanted to. S o one could call it 1234, and it might have a whole s pecification behind it, and I t might be called 7778 by s omebody els e. T her e was no way of compar is on. T he s olution was to have a common s ys tem acr os s the Nes tle empir e which would cr eate s avings thr ough gr oup buying power and facilitate data s har ing between s ubs idiar ies .

The Proposal: One Nestl, Under SAP

One Nes tl r eflects the goal of tr ans for ming the s epar ate br ands into one highly integr ated company

The Trouble:
Nes tle US A us es nine differ ent gener al ledger s and 28 points of cus tomer entr y I t had multiple pur chas ing s ys tems with no r ecor d of how much volume it was doing with a par ticular vendor becaus e ever y factor y s et up their own vendor mas ter s and pur chas ed on their own. T her e was need for bus ines s Pr oces s Reengineer ing to change the way of doing bus ines s . T h e S ol u t ion pr opos ed: Recommendation for S AP Package Maj or changes in the nex t 3 to 5 year s in bus ines s pr oces s es .

The Sol uti on Im pl em entati on

B y October 1997, a team of 50 top bus ines s ex ecutives and 10 s enior I T pr ofes s ionals had been as s embled to implement the S AP pr oj ect. T he team's goal was to come up with a s et of bes t pr actices that would become common wor k pr ocedur es for ever y Nes tl divis ion. All the divis ional functions manufactur ing, pur chas ing, accounting and s ales would have to give up their old appr oaches and accept the new pan- Nes tl way. T he S AP s ys tem would be cus tomiz ed ar ound the unifor m bus ines s pr oces s es . B y Mar ch 1998 the key s takeholder s had a plan in place. Nes tl would implement five S AP modules pur chas ing, financials , s ales and dis tr ibution, accounts payable and accounts r eceivableand the Manugis tics ' s upply chain module.

Development wor k began in July in 1998. T he deadline for four modules was Y2K .T he new s ys tems would have to double as code fix es and be in place for the millennial change Nes tl US A made the deadline. B ut its has te cr eated almos t as many pr oblems as it s olved.

The Process: Nestl's Crunch

Even befor e thr ee of the S AP and the Manugis tics modules wer e r olled out in late 1999, ther e was r ebellion in the r anks . Employee r es is tance becaus e none of the gr oups that wer e going to be dir ectly affected by the new pr oces s es and s ys tems wer e r epr es ented on the key s takeholder s team. Dunn(CI O) s ays , " We wer e always s ur pr is ing [ the heads of s ales and the divis ions ] becaus e we would br ing s omething up to the ex ecutive s teer ing committee that they wer en't pr ivy to." Dunn calls that her near fatal mis take. B y the beginning of 2000, the r ollout had collaps ed into chaos . Not only did wor ker s not under s tand how to us e the new s ys tem, they didn't even under s tand the new pr oces s es . And the divis ional ex ecutives , who wer e j us t as confus ed as their employees and even angr ier didn't go out of their way to help.

 Nobody wanted to lear n the new way of doing things . Mor ale tumbled. T ur nover among the employees who for ecas t demand for Nes tl pr oducts r eached 77 per cent; the planner s s imply wer e loath or unable to abandon their familiar s pr eads heets for the complex models of Manugis tics . A technical pr oblem s oon emer ged as well. I n the r us h to beat the Y2K deadline, the B es t pr oj ect team had over looked the integr ation points between the modules . I n its has te to unify the company's s epar ate br ands , the pr oj ect team had es s entially r eplaced divis ional s ilos with pr oces s s ilos .

The R em edy:
I n June 2000 the pr oj ect was halted. T he company r emoved Mar c Richender fer as pr oj ect coleader and gave Dunn full r es pons ibility. I n October 2000, Dunn gather ed 19 Nes tl US A key s takeholder s and bus ines s ex ecutives for a thr ee- day offs ite at the DoubleT r ee Hotel in Pas adena, Calif., about 10 miles fr om Nes tl headquar ter s . T he offs ite gr oup member s eventually decided that to finis h the pr oj ect they would need to begin at the beginning, s tar ting with the bus ines s r equir ements then r eaching an end date, r ather than tr ying to fit the pr oj ect into a mold s haped by a pr edeter mined end date. T hey als o concluded they had to do a better j ob of making s ur e that they had s uppor t fr om key divis ional heads and that all the employees knew ex actly what changes wer e taking place, when, why and how.

Lessons learnt

No m aj or sof t w ar ei m pl em ent at i on i s about sof t w ar e.I t s about change m anagem ent . Shor t cut si n ERP i m pl em ent at i on i s shor t est r out et o unem pl oym ent . M ovi ng t o SAP i s about chal l engi ng t he pr i nci pl es and bel i efoft he em pl oyees and t he w ay t hi ngs have been done t i l lnow , hence i t s ver yr i sky.

The End Game: Sadder But Wiser

B y Apr il 2001, the end- s tate des ign was complete, giving the pr oj ect team a highly detailed r oad map to follow. A month later , T om James came on boar d as dir ector of pr oces s change for the B es t pr oj ect, having the s ole r es pons ibility of acting as a liais on between the divis ions and the pr oj ect team. James s ays that he was s hocked by the s till poor r elations hip between the divis ions and the pr oj ect team. Nes tl US A's pr oj ect has achieved s ignificant ROI , with the lar ges t chunk of s avings fr om better demand for ecas ting. T he B es t pr oj ect has s aved $325 million till date.