ERP Assignment Group 2

S.P. JAIN INSTITUTE OF MANAGEMENT & RESEARCH

MUMBAI

Study of the BPR and ERP implementation activities in Cadbury

Jul – 2010

Group

Jai Singh

Kanica Rangnekar

Rajat Chandra

Saurav Kumar

Study of the BPR and ERP implementation activities in Cadbury PGDM 09-11

Venkta Raghavan

ContentsPROJECT SCOPE:....................................................................................................................................3

PROJECT DELIVERABLES:........................................................................................................................3

COMPANY INTRODUCTION....................................................................................................................3

CADBURY’S CRITICAL BUSINESS PROCESSES..........................................................................................5

Sourcing.............................................................................................................................................6

Production planning..........................................................................................................................7

Inventory control...............................................................................................................................8

Distribution & Logistics......................................................................................................................9

Finance & HR.....................................................................................................................................9

Cadbury India High Level Business Process Map.................................................................................11

The Level 1 business processes........................................................................................................12

Level 2 Business Processes..............................................................................................................12

Type of BPR implementation...............................................................................................................15

ERP IMPLEMENTATION METHODOLOGY CHALLENGES.......................................................................18

BUSINESS BENEFITS OF BPR AND ERP IMPLEMENTATION...................................................................23

Benefits specific to Cadbury................................................................................................................25

Learning and recommendations from Cadbury implementation........................................................27

S.P. Jain Institute of Management & ResearchEnter Solutions, Jul’2010 2


PROJECT SCOPE: Study the implementation of Business Process reengineering in one of the company Cadbury

which holds one of the finest supply chain and a company which has been on the fast track on

the growth with its foot on the accelerator pedal in full throttle.

Study the implementation of Enterprise Resource Planning within the organization which has

operations in over 56 countries and how the operations have been integrated and analyse the

challenges faced and derive learning out of the same

PROJECT DELIVERABLES:1. Identify five critical business processes

2. Plot the process map of the organization

3. Analyse the type of BPR implementation in the company

4. Analyse the ERP implementation in the company and the challenges

5. Business benefits and learnings

COMPANY INTRODUCTIONThe company that we have chosen for the visit is Cadburys. The company has seen a great

growth phase. Cadbury India is a fully owned subsidy of Kraft Foods Inc. The combination

of Kraft Foods and Cadbury creates a global powerhouse in snacks, confectionery and quick

meals. With annual revenues of approximately $50 billion, the combined company is the

world's second largest food company, making delicious products for billions of consumers in

more than 160 countries. We employ approximately 140,000 people and have operations in

more than 70 countries. In India, Cadbury began its operations in 1948 by importing

chocolates. After 60 years of existence, it today has five company-owned manufacturing

facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal

Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkota and Chennai). The corporate

office is in Mumbai.

Currently, Cadbury India operates in four categories viz. Chocolate Confectionery, Milk

Food Drinks, Candy and Gum category. In the Chocolate Confectionery business, Cadbury



has maintained its undisputed leadership over the years. Some of the key brands in India are

Cadbury Dairy Milk, 5 Star, Perk, Éclairs and Celebrations. Cadbury enjoys a value market

share of over 70% - the highest Cadbury brand share in the world. In the Milk Food drinks

segment it’s the leading Malted Food Drink (MFD) in the country. Similarly in the medicated

candy category it is the undisputed leader.

Since 1965 Cadbury has also pioneered the development of cocoa cultivation in India. For

over two decades, it has worked with the Kerala Agriculture University to undertake cocoa

research and released clones, hybrids that improve the cocoa yield. The team visits farmers

and advise them on the cultivation aspects from planting to harvesting. It also conducts

farmers meetings & seminars to educate them on Cocoa cultivation aspects. Our efforts have

increased cocoa productivity and touched the lives of thousands of farmers.



CADBURY’S CRITICAL BUSINESS PROCESSES

Cadbury Ltd is a manufacturing and distribution company, its products include:

These products fall under the category of Fast Moving Consumer Goods (FMCG).

The characteristics and required performance indicators of perishable FMCG products:



The above parameters define the critical business process of Cadbury. These factors

are in forward or customer facing supply chain of Cadbury PLC. However, in order to fulfill

above requirements the upward supply chain should also be looked into and perfected. Our

group has identified the following critical business processes for Cadbury PLC’s success:

SourcingAs the economy increases in complexity, it has become more difficult for organizations to

adapt to marketplace changes. Organizations can no longer efficiently possess all expertise

in-house. The result is a greater dependence on interrelationships with outside organizations

that can provide the expertise these organizations may be lacking. In particular,

manufacturing companies may find it advantageous for suppliers to provide products and

services rather than performing them in-house. Outsourcing is a supplier agreement that may

come to mind for most readers. However, there are several types of supplier agreements a

company may rely upon.



Cadbury produces chocolates and products derived from it, cocoa being an internationally

traded commodity and not produced in India plays an important role in the chocolate supply

chain. In addition various other products such as nuts, milk, sugar etc. are required by

Cadbury, all these commodities are perishable with very short shelf life. The procurement

and sourcing of these commodities play a major role in the business.

Fig: shows the typical supply chain for cocoa and holds for other commodity products required by Cadbury PLC

An instance of the importance of sourcing can be found in the recent fairtrade practices

followed by coffee and chocolate makers and the production of fairtrade chocolate now in

progress in European countries by Cadbury PLC.

Sourcing strategy at Cadbury outlines the long term and short term sourcing contracts with

the suppliers. It also aims to discover partnerships with intermediaries and logistics providers

to assure availability of raw materials in a smooth fashion and at fair prices.

Production planningMany of Cadbury PLC’s products have a seasonal demand, some of them also a

smooth demand over the year. Production planning aims to utilize machinery and manpower

at Cadbury PLC’s facilities in order to have a smooth production schedule while maintain

optimum capacity utilization.



Following processes are involved in production planning:

1. Define machine families, Shift hours and manufacturing capacity

2. Define manufacturing processes, process set up times and production throughput

rates.

3. Detail resources and processes involved for each job, materials required and work

instructions.

4. Forecast and schedule resource requirements and track vs capacity.

5. Re-schedule work and re-allocate resources to meet customer requirements.

6. Prioritize workload and process jobs.

7. Carry any jobs not run as scheduled to next shift and ensure all incomplete jobs

are on the schedule.

8. Automate clerical tasks and enable timely and relevant production scheduling.

An efficient production planning system at Cadbury will enable it to achieve:

1. Supply chain optimization. The system can connect to an MRP.

2. Material Requirements Plan to ensure the necessary materials for order are on

hand or ordered on time. We can also provide an MRP system if needed.

3. Reduced scheduling effort by arranging an optimal schedule per the constraints.

4. Labour load levelling. Reduce labour spikes and declines by projecting schedule

into the future.

5. Real time information. View the jobs that are currently running, allow customer

services to see the capacity available.

6. Identify and reduce bottlenecks.

Inventory controlThe majority products of Cadbury PLC have a low shelf life and one of the key

performance indicators accepted by Cadbury is the Freshness Index of the products delivered

by them to the consumer. At the same time, Range Availability at Distributors are to be kept

at a min of 95% and is being currently maintained.



Inventory control allows Cadbury PLC to achieve low inventory levels thereby reducing costs

and achieve greater freshness index. Inventory control however, does not aim to specifically

reduce inventory, a sufficient inventory levels must be maintained to have a service level at

the Depot of 95% RAD. It also helps to reduce distribution runs thereby saving transportation

and logistics costs.

The u/s inventory of raw materials helps to smoothen availability and reduce risks of raw

material unavailability for production at the same time guard against price fluctuations in

commodity markets. The associated costs saved include but limited to, machine and

manpower utilization vs. inventory costs and costs of sourcing.

Distribution & Logistics

The logistics management area covers the activities related to the physical flow of materials,

semi-elaborated products, raw materials, and the acquisition by the initial providers from the

sale to the consumers. This includes the storage, production and distribution of the products.

The conception of the logistic environment in an integrated way is reached through the

integration of all, and each of the activities that constitute it.

Distribution and logistics form a major chunk of costs under selling expenses; in India it

forms 6.5% of India’s GDP and 14% of USA GDP. Distribution and logistics also determine

location of warehouses and depots for optimal availability at the customer level.

For Cadbury distribution is not one way but rather a two way process, where-in there are

costs associated with returns and stales. It also plays a part in ensuring the Freshness Index of

products.

Finance & HR

The intense competitiveness in the global markets demand an improvement in the results. In

this context, it is critical of the management of human resources. The concept of Human

Resources as a cost generator has to change into a profits generator.Human Resources is a

fundamental part of the scheme of every successful enterprise, as the information received by S.P. Jain Institute of Management & ResearchEnter Solutions, Jul’2010 9


this area needs to have a continuous follow-up and correct evaluation for the professional

development and the social welfare of the workers. However, due to the large quantity of

information that is handled in this area, the job is becoming more difficult everyday. ERP is

represented like a useful tool to help and orient the users to focus their work in the direct

relationship with the staff, and to link the personal skills and aspirations of the personnel

related to the objectives and goals of the company.

Cash management is a fundamental application that allows you to manage your accounts. It

includes banks, savings institutions and charge cards. All the appropriate functions are

conveniently centralized in one location. The application provides facilities for accounting

staff to receive payments, make deposits, print checks, record manual checks, record funds

transfer and card charges, pay off charges and reconcile your cash accounts.



Cadbury India High Level Business Process Map

Cadbury India PLC is essentially a manufacturing and distribution company and as such shares many of its processes with the manufacturing industry. Figure 1 gives a layout of its facilities in India.

The business processes of the company are aligned to its objectives as stated in the company’s mission, “Financial scorecard, judiciously reinforced by our quality, commitment and culture”. The stated objectives in the confectionery business translate into a fresh product available at arm’s length to the consumer at a profit. To achieve the implied objective Cadbury’s processes need to be efficient, lean and responsive to the consumer’s demand.

The processes and intermediaries involved in the cash to cash cycle for Cadbury India is as shown below:

Figure 2: Cadbury India Supply Chain


Figure 1 : Cadbury India Facilities Location (Source Cadbury India website)


The Level 1 business processes

Level 2 Business Processes

1. Sales and Operations planninga. Product conceptualizationb. Product designc. Engineering developmentd. Strategic & forecasted sales targetse. Define and communicate product intentf. Manage engineering changes

2. Master Resource Planninga. Develop family wise production plansb. Asses capacity

3. Master schedulinga. Schedule production runs based on demand forecasts and ordersb. Develop capacity requirements

4. Sales planninga. Logisticsb. Warehouse capacityc. Location planningd. Schedulinge. Dispatchingf. Sales targets


5. Forecasting

Sales and Operations Planning

2. Master Resource Planning 3. Master Scheduling 4. Sales Planning

6a. Buy 7a. Inv 8. Make 7b. Inv 9. Sell

6b. Purchasing control 10. Production & Inv Control 11. Sales Control

12. HR, Reporting & Financial measurement


5. Buya. Manage supplier relationshipsb. Plan and order production materialc. Non production materiald. Track inbound materiale. Receive and manage production materialf. Receive and manage non-production materialg. Receive and manage service parts

6. Inventory controla. Track receiptsb. Maintain and record inventory levelsc. Track outbound inventory

7. Makea. Produce productb. Control production levels

8. Inventorya. Track receiptsb. Maintain and record inventory levelsc. Track outbound inventory

9. Sella. Order processingb. Product scheduling and demand smootheningc. Invoice productd. Ship producte. Track product information for stales and recallsf. Perform product returnsg. Perform quality assurance

10. Manage Production Processes

a. Manage Production Networkb. Manage Production Performancec. Manage Production Orders and In-Process Products (WIP) Informationd. Control Production Equipmente. Execute Maintenance Plans

11. Provide Human Resources (HR) Support

a. Develop Human Resourcesb. Ensure Site Safetyc. Manage Team Relationsd. Plan and Administer Compensation and Benefits



12. Provide Financial Support

a. Perform Accounts Receivableb. Perform Accounts Payablec. Provide Financial Accounting and Controlling Supportd. Perform Budgeting and Planninge. Plan Capital Assetsf. Perform Cash Managementg. Manage External Relationsh. Close the Books



Type of BPR implementation

Business process reengineering (BPR) began as a private sector technique to help

organizations fundamentally rethink how they do their work in order to dramatically improve

customer service, cut operational costs, and become world-class competitors. A key stimulus

for reengineering has been the continuing development and deployment of sophisticated

information systems and networks. Leading organizations are becoming bolder in using this

technology to support innovative business processes, rather than refining current ways of

doing work.

Fig.: Reengineering guidance and relationship of Mission and Work Processes to Information

Technology

Business process reengineering is one approach for redesigning the way work is done to

better support the organization's mission and reduce costs. Reengineering starts with a high-

level assessment of the organization's mission, strategic goals, and customer needs. Basic

questions are asked, such as "Does our mission need to be redefined? Are our strategic goals

aligned with our mission? Who are our customers?" An organization may find that it is

operating on questionable assumptions, particularly in terms of the wants and needs of its


http://en.wikipedia.org/w/index.php?title=Customer_needs&action=edit&redlink=1

http://en.wikipedia.org/wiki/Cost

http://en.wikipedia.org/wiki/Mission_statement

http://en.wikipedia.org/wiki/Computer_network

http://en.wikipedia.org/wiki/Information_system

http://en.wikipedia.org/wiki/Competitor

http://en.wikipedia.org/w/index.php?title=Operational_cost&action=edit&redlink=1

http://en.wikipedia.org/wiki/Customer_service


customers. Only after the organization rethinks what it should be doing, does it go on to

decide how best to do it.

Within the framework of this basic assessment of mission and goals, reengineering focuses

on the organization's business processes—the steps and procedures that govern how resources

are used to create products and services that meet the needs of particular customers or

markets. As a structured ordering of work steps across time and place, a business process can

be decomposed into specific activities, measured, modeled, and improved. It can also be

completely redesigned or eliminated altogether. Reengineering identifies, analyzes, and

redesigns an organization's core business processes with the aim of achieving dramatic

improvements in critical performance measures, such as cost, quality, service, and speed.

BPR is primarily categorized as:

Clean Slate

Technology Enabled

Clean Slate Advantages Technology Enabled Advantages

Not constrained by tool Focus on ERP, best practices

Not limited by best practice database Tools help structure reengineering

Retain competitive advantages Tools focus reengineering

Not subject to vendor changes Process bounded, thus easier

may be only way to implement advanced

technology

know design is feasible

may have unique features where best

practices inappropriate

Great likelihood that cost, time objectives met

The management knew about the existing systems company had. Cadbury had

operations in 16 different locations. It had marketing in several different locations (26 depots)

and they were all highly decentralized. The management was looking at ways to ease things

out. So they knew about SAP systems and also knew that one day or the other they would


http://en.wikipedia.org/wiki/Market

http://en.wikipedia.org/wiki/Customer

http://en.wikipedia.org/wiki/Service_(economics)

http://en.wikipedia.org/wiki/Product_(business)

http://en.wikipedia.org/wiki/Framework


have to go for this. Company was on a fast paced growth and that point of time it was very

important to implement the system. The top management was very supportive in that.

BPR at Cadbury was Technology enabled and focussed on implementing ERP system to

bring in changes. The exercise was made a KPI for all major functions and implementation

was controlled by a core team. BPR was done from scratch to suit the needs of ERP system

and India office was first to implement this. The exercise did not get much resistance from

the employees primarily because of following reasons:

Since, it was technology enabled BPR, processes were not changed much and hence

people did not have any issues. It was easier to implement this.

Young employee base of Cadbury which is always ready to change for the benefit of

the organization.

Post BPR exercise the three things that company controls are:

Range availability at the distributor

Range availability at the depot

Freshness index.



ERP IMPLEMENTATION METHODOLOGY CHALLENGESCadbury’s India was the very first organisational unit all over the world to implement

ERP in its processes. The Indian subunit was very excited and looking forward to these

practises. Also, Cadbury’s India themselves took the initiative to implement ERP as they

were confident of their manpower being able to handle the implementation process efficiently

& effectively. The implementation process in India was started from scratch as they were the

first to implement that in all over global application of the Cadbury. They tried to inculpate

the best practises of the company and tried to build on the strengths the past systems in new

ERP systems.

Cadbury’s knew that for implementation will they will be standardizing the processes

in 16 different locations. People will have to gear up in order to streamline the processes. The

progress has to be rapid for the implementation which was not very easy. The growth wave

blowing over the developing countries encouraged the top management to look forward to the

ERP implementation which would set the base for huge information sharing.

The ERP initiative was to bring about a complete integration of the major processes

in the business. The major processes being procurement system, finance system, the Human

Resources and other departments. These were functioning in a completely decentralised

manner. Also, Cadbury’s have four branch operations and 13 manufacturing operations and

each had their own systems running in isolation. The finance department was the only one

common to all. ERP served as an integrating system and a solution for their then existing

decentralised model. When they were implementing the system, they integrated using the

finance module first. It was a staggered implementation with finance first followed by the

other modules.

In order to implement these ERP processes, Cadbury’s had to impart training a few

of their young professionals. Since these were quite tech savvy and open to new ideas, overall

training period was reduced. The implementation methodology adopted by Cadbury’s

happened in 1995 and they went ahead using a big bang approach. They did the

implementation company wise.



Cadbury’s had one major expectation from ERP ie. IT to help the management work

better than before with the existing systems in place. It would help increase tracking back, for

e.g. we can find out who has keyed a data and what they have keyed and when. In order to

carry out the ERP implementation, Cadbury’s had to align with a n external vendor. For ERP

partnership with Siemens and for infrastructure management ( Help end user desk Functions)

partnership with IBM. The decision for this Siemens was taken centrally at the UK function

we continued on the same so have same systems all over globe functions.

In terms of the visibility achieved through ERP up-to lower Tier levels Cadbury is able to

achieve: Raw materials completely and sales up-to the SKU Level. For the suppliers there is

one portal is run known as Vendor Connect, through this they have access to check the

inventory they provide to Cadbury at our plant premises

Initially Cadbury’s went with Finance and then subsequently to production and supply chain.

They went for a function based big bang approach in India and then implemented the whole

module all across company in span of 1 year so it can be said as big bang as whole.

It was completely top management driven. Cadbury’s have a proper MIS now. Data is

entered only once. The entire system gets updated. One can see the consolidated data from

anywhere and make decisions. From manual entries it has become a totally system driven

data entry now.

The ERP system made a lot of functional changes in the system. Bill material, automation

and integration happened from completely manual process. Booking of the finance entries,

bill material receipts and inventory getting updated, The real time data was made available to

the company wide function for e.g. for production function the end of shift data is available,

for finished goods inventory the inventory levels at all our depots reflects on portal.

The ERP methodology implemented by Cadbury’s can be explained on the basis of the

general methodology approach taken by companies. Following is the phased approach

followed by some leading companies. The various phases in this approach are as follows.

Here, Cadbury’s has tried to combine all these phases into a single phase and implemented

BIG BANG method to implement its ERP Practises.



Phase1:

Project Preparation

Hire key project members, Install Development system, Train internal IT transfers, Select

systems integrator, Project Orientation, Install pre-configured client, Prepare for blueprint

phase

Configure WHV prototype system

Detailed work plan

Revised cost estimate

Phase 2:

Detailed design & requirements

Process

Reporting

Forms

Business improvement Measures, Identify business implications, Project risks &

opportunities, Global application map, Global template system, Finalize global scope,

Revised capabilities roadmap, Draft change management.

Phase3:

Master data conversion, Global template configuration, Exceptions agreement (statutory/local

must do’s), Exceptions configuration, Cycle unit testing, Cycle integration testing, Issues

resolution, Documentation, Begin global training material preparation

Phase 4:

Finalize training program, End-user training, Readiness assessment, Production system prep,

Finalize cutover plan, Communicate cutover plan, Inform external partners as necessary,

Day-in-the-Life (DIL) Tests

Phase5:

Production master data conversion, Execute cutover plan, Monitor process & system usage,

On-site support, Issue resolution, Communicate on-going support process- ESC update at end

of phase



Cadbury laid out a grand plan for their ERP implementation. The installation of ERP systems

of all modules happens across the entire organization at once. The big bang approach

promised to reduce the integration cost in the condition of thorough and careful execution.

This method dominated early ERP implementations; it partially contributed the higher rate of

failure in ERP implementation.

Today, not many companies dare to attempt it anymore. The premise of this implementation

method is treating ERP implementation as the implementation of a large-scale information

system, which typically follows SDLC (Systems Development Life Cycle).

But an ERP system is much more than a traditional information system in the fact that the

implementation of ERP continuously calls for the realignment of business processes. Many

parties involved in ERP software systems are not IT professionals. ERP more than automates

existing business processes. ERP transforms the business processes.

The appeal of the big bang implementation strategy is that it focuses the organization for an

intense and relatively shorter period of time than if the project were phased. This often helps

address long-term resource shortages. It also condenses the pain and difficulty of an ERP

project into a shorter period of time, although the pain is typically more pronounced using

this approach.

The downside of the big bang implementation approach is that the project is often rushed,

details are overlooked, and changes to business processes may not be the best ones for the

organization. And, as mentioned above, the pain is often more severe due to the hectic nature

of this approach. More often than not, my experience has been that projects that implement

an overly aggressive big bang approach are more risky and result in less satisfaction with the

system's abilities to meet important business requirements.

The other end of the spectrum is to follow a slower, phased approach. This can either by

functional business area or geography. The appeal here is that is allows project teams to take



their time in the planning, customization, and testing of the system while continuing with

day-to-day jobs.

The downsides are that these types of phased projects often lack the urgency and focus of a

big-bang project. It can also lead to "change fatigue," which can cause employees to become

burned out on constant change. Instead of getting the project over with in a shorter period of

time, these projects involve constant change over longer periods, which can be draining to

employees.

The Cadbury’s Supply chain network is as shown. ERP has brought about modifications for

the better in these processes.



BUSINESS BENEFITS OF BPR AND ERP IMPLEMENTATIONMeeting the marketplace demands

We are currently in an environment which has drastically changed from a pull system

to a push system, thanks to the increasing interest in entrepreneurs bringing in the same

products and trying to meet the same needs during the era when demand was more than

supply. Before we realized it supply became more than demand because of increasing number

of competition. Cadburys also faces the same situation. Working in the same way as before is

certainly not a solution and will lead to the erosion of the company. Hence it is a proven fact

that change has become mandatory because of the macroeconomic factors governing the

markets. The customers today want more for less. If you do not provide it he is ready to go

for another supplier who can and who will in order to ensure your downfall.

The competition is intense and it’s a red ocean. The customers are also demanding variety

and flexibility at the same time which demands more from the manufacturing side and the

companies have to be on their toes to service customers where loyalty is a lost word.

Retention of customers has become a great strategy in itself now. Organizations have become

complex in order to suit all these needs. In such a buyers’ market, the implementation of BPR

and ERP has its benefits which have become visibly evident.

Improving the functional efficiency of the organization at large

Every company is moving from its conventional system to an integrated flexible

system capable of meeting future needs and the future almost always is very near and is

market driven and one has no control on the same. The companies that haven’t changed have

been faced with high overheads compared to those that have become well coordinated. The

overheads are due to the presence of several non value adding activities that consume

resources. Now companies are becoming leaner (reducing utilities cost) and meaner (reducing

manpower cost). The initial setup in the company had several informal systems operating

which increased the lead time and also the time to market. This led to several disappointed

customers and the remedy to this in the short run has been to increase the inventory and hold

higher stocks so as to reach higher customer satisfaction level and service level. This has

increased the inventory holding cost and locks up money in the system. Hence this causes

cash flow problems. There is lack of accountability within the organization as problems S.P. Jain Institute of Management & ResearchEnter Solutions, Jul’2010 23


cannot be traced back and this traceability issue leads to finger pointing and IR issues within

the organization. There are times where the plans get inflated because of inefficiencies built

in the supply chain which expect that the company will not be able to meet the full demand.

This disbelief leads to the bull whip effect and increased cost and for a company like Cadbury

dealing with perishable items it becomes an imperative to attack this issue. There are

schedule mismatches and the company has 26 depots each functioning as a silo and this will

only go on to amplify the impact. This leads to constant fire-fighting which leads to employee

frustration and confusion.



Benefits specific to CadburyCadbury had operations in 16 locations and 26 depots and all of these were highly

decentralised. The management was looking at ways to sort internal problems and this

is where SAP had come to the rescue

Cadbury was on a fast paced growth and could not continue with the existing systems

and the pace was too slow due to added inefficiencies down the chain. BPR

implementation handled all the issues and added efficiency and guided the fast paced

growth

Cadbury standardized the processes within the 16 locations thereby benchmarking the

best practices in the locations and having a marked increase in the efficiency by

bringing all the locations to the same page and the best page.

The implementation of ERP brought in a new way of warehouse management system

and brought in structure to branch offices and the depots

The manufacturing in itself had 13 operations and each was operating in a silo. This

had increased the work in progress and the integration of the processes has done well

for the company

While implementing the ERP systems, the company has built it up on the past

strengths of the company thereby not losing out on its competitive advantage and at

the same time saddling itself up for a fast paced growth

The initial implementation took time and then the successive implementations took

lesser time and cost and there is a huge advantage in saving cost while in the

implementation phase itself

The reaction from competition does not matter in this because this is not a change that

was advertised to the market. This is an internal process restructuring and was a

welcome change within the company which badly needed the change

The company also has built in a robust regular feedback system to monitor the

changes and check if they go according to the initial plan. The entire implementation

is cross functional and hence it is important that there is a high increase in the

efficiency.

The ERP vendor was also selected from among the best in class vendors which helped

the process occur in a streamlined fashion and avoided any possible chances of

hiccups during the initial implementation phase. S.P. Jain Institute of Management & ResearchEnter Solutions, Jul’2010 25


The system has also been deployed up to the vendors. They have a portal called

vendor connect where they can see their inventory movement and make plans

accordingly. Hence the restructuring happens not only internally but also across to the

supplier which will add on to the benefits that are accrued

It was considered a low cost and high result implementation which by itself highlights

the success and the benefits.

There is increase transparency in the organization though there is authorization

involved. This helps to keep the people in the same page and ensures proper

integration

The company achieved 70% automation in processes and has not eliminated any

process specifically

The company has a proper MIS (Material Information System) because of this

implementation and the entire process is top driven

The jobs were classified into complexity base and the high complex jobs were

targeted and automated. No manpower elimination took place. Instead the company

hired manpower

Bill material, automation and integration happened from completely manual process.

Booking of the finance entries, bill material receipts and inventory getting updated,

The real time data was made available to the company wide function for e.g. for

production function the end of shift data is available, for finished goods inventory the

inventory levels at all our depots reflects on portal.

A new stock accounting system has been put in place which takes care of freshness of

the product



Learning and recommendations from Cadbury implementation

The transition challenges the comfort zone of individuals, teams, business units and

the organization, built over a period of time.

It is extremely important to generate energy within the team members and creating

ownership in the organization.

It is important to have a top-driven implementation especially for a company that is

focusing on a growth of 20-30%

When the top management feels the importance and the need for the implementation

of the system, the implementation is much easier as apropos to the situation where the

CFO has to generate the idea and get the approval for completion of the project within

the specified timeline and the budget

The support of employees is very essential in the implementation though it is top

driven. There has to be a clear communication of the need and the benefits of the

implementation and the employees have to feel the need of the same

There has to be clear setting up of accountability and ownership in the

implementation stage and a special team has to be set up for regular monitoring and

control

The implementation can be tailor made to fit the growth plan. Having only the

necessary modules will also reduce cost and pace up the implementation process

Starting the integration with the finance module has been a time tested and proven

implementation strategy that works almost every time

ERP serves as a one stop solution when an organization shifts from a decentralized

model to a centralized lean model where the entire organization is aligned to the

vision and mission of the company

When integration takes place it is wise to retain the best practices across the

departments and build the implementation on the strengths of the best practices so as

to retain the competitive structure, integrate functions and also become best in class

Proper training has to be given to the employees during the implementation stage and

monitoring has to take place in order to ensure that the implementation has given the



desired results and that the user acceptance is ensured because of the ease of access

and simplicity of the process

Several companies do a big bang in one area and follow it up a geographical

deployment of the same after testing the success. Trial runs are very important

Seldom such activities are tagged as internal process reengineering and are known

only within the organization and hence do not attract reactions from the competitors

immediately giving a head start for the pioneers. Cadbury was a pioneer in this case

There has to be a proper reporting and documentation system in any organization.

This can be achieved by the implementation of ERP because it automates the

reporting and documentation is available in electronic media

Gradually it makes sense to integrate vendors also so that the entire structure in and

around the organization gets leaner. In the demanding environment luxury will soon

become a necessity and it is important to keep improving

It is essential to look at total cost of ownership and identify if the implementation will

yield results. The study can be done using NPV or payback period analysis

ERP most of all gives a transparency in a system that facilitates overall growth and

empowers the people and motivates them as they know what’s happening in the

organization. Transparency brings in integrity.

It is essential to alter the key performance indicators of the employees and add the

implementation success to the indices to ensure even participation and to answer the

“What’s in it for me?” question that arises in the minds of those people who have to

spend additional time out of their work for the implementation

SAP Project has to be analyzed from the total cost of ownership perspective:

Hardware costs

Licensing costs

Training and knowledge transfer costs

Personnel costs


ERP Assignment Group 2

Documents

Transcript of ERP Assignment Group 2