ITC MIS Project

7/31/2019 ITC MIS Project

1/23

MBA PT-IIIRD SEM (2010-2013) Page 1

SUBMITTED BY:-

GAUTAM ACHARYA, S- 25 GOPAL YADAV, S- 26 HARJOT SINGH, S- 27 JATIN BARUI, S- 29 MAYANK KAURA, S- 35 VIJAYA S, S- 72 V VISWANATHAN, S- 84 HARI NARAYAN RAJ, S- 85 ANINDA RAY, S- 86


2/23


CONTENTS

REFERENCES 3

1. FMCG INDUSTRY...................................................................................................... 4

2. INDUSTRY HISTORY ........................................................................................................... 4

2.1.HISTORICALGROWTH. ................................................................................................. 4

2.2. PROJECTED GROTH ESTIMATE ............................................................................. 5

3. INDUSTRY PARAMETERS ................................................................................................. 5

4. CRITICAL SUCCESS FACTORS OF FMCG INDUSTRY .............................................. 6

4.1 THE CRITICAL SUCCESSPYRAMID(CSP) .............................................................. 7

5. BEST IN CLASS COMPANIES ........................................................................................... 8

6. AN ORGANISATIONAL IN THE INDUSTRY.................................................................... 9

7. BUSINESS OPERATION OF ITC ........................................................................................ 98. IT-IMPLIMANTATION TRACK RECORD ........................................................................ 13

8.1. IT HIERARCHY .................................................................................................. 13

8.2. WORKING OF IT HIERARCHY ................................................................................... 14

8.3 CLASIFICATION OF IT PROPOSALS ........................................................................ 15

8.4 DEPARTMENT OF ITCS IT DIVISIONS..................................................................... 15

8.5. HARDWARE AT ITC...................................................................................................... 15

8.6. VIRTULISATION ................................................................................................ 16

8. 7 ERP AT ITC ..................................................................................................................... 16

8.8. SPECIFIC IT INTIATIVES AT DIVISIONAL LEVEL ................................................. 16

8.9. FIRST MANUFACTURED-FIRST-OUT(FMFO ......................................................... 16

8.8.1. PUSH MIS ....................................................................................................... 17

8.8.2 FASTREACT EVOLUTION......................................................................................... 17

8.8.3 FREE BORDERS PLM ............................................................................................... 17

8.8.4 PROJECT DHANUSH ................................................................................................. 17

8.8.5 E-CHOUPAL: STRATEGIC THRUST....................................................................... 18

9. FUTURE SCENARIO BUILDING FOR FMCG INDUSTRY...................................... 20

10. STRATEGIC USE OF IT ......................................................................................... 21

11. IT VISION & IT STRATEGY OF ITC ....................................................................... 23


3/23


REFRENCES

White paper on Competitive Capabilities for the Future by S Padmanabhan & JKrishnamurthy, TCS

Technical paper on Future of IT application development, IBM, June 2007 Case Study: Community based Information System, ITC e-choupal, FAO

magazine, Nov 2005

ITC website,www.itc.co.in Case study How ITC uses process to stay sharp by Rahul Neel Mani from

Reader ROI

Case study ITC Lifestyles Proactive Planning Reaps Benefits, from Reader ROI
http://www.itc.co.in/http://www.itc.co.in/http://www.itc.co.in/http://www.itc.co.in/


4/23


1. FMCG INDUSTRY

The term FMCG means Fast Moving Consumer Goods. The term FMCG refers to thoseretail goods that are generally replaced or fully used up over a short period of days, weeks, ormonths, or within one year. FMCG products that are sold quickly and at relatively low cost.Examples include non-durable goods such as soft drinks, toiletries and grocery items.

CHARACTERISTICS OF FMCG

From the Consumers' Perspective: Frequent purchase Low involvement i.e. little or no effort to choose the item Low price

From the Marketers' Perspective: High volumes Low contribution margins Extensive distribution networks High stock turnover

2. INDUSTRY HISTORY

The Indian FMCG market has been divided for a long time between the Organized sectorand the Unorganized sector. Organized Sector is the giant malls with large department stores,Cineplex's, supermarkets, and pharmacy chain, etc. Unorganized Sector comprise of mom and

pop retailers and independent retailers, etc.

The fast moving consumer goods(FMCG) industry, which accounts for 2.2 per cent ofIndias GDP, is expected to attain a size of INR 1500 billion by FY 2012.

2.1HISTORICAL GROWTH.

The chart below shows in figures the growth rate the FMCG sector has witnessed till now since2001.


5/23


2.2 PROJECTED GROWTH ESTIMATES

3. INDUSTRY PARAMETERS

Design and Manufacturing Low Capital Intensity Technology


6/23


Third-party Manufacturing Marketing and Distribution

High Initial Launch Cost Limited Mass Media Options Huge Distribution Network

Competition Significant Presence of Unorganized Sector A highly scattered market and poor transport infrastructure Low brand awareness enables local players to market their spurious look-alike brands. Lower overheads due to limited geography, family management, focused product lines

and minimal expenditure on marketing.

Entry barriers are high4. CRITICAL SUCCESS FACTORS OF FMCG INDUSTRY


7/23


4.1 THE CRITICL SUCCESS PYRAMID (CSP)


8/23


5. BEST IN CLASS COMPANIESThe following companies are the best in FMCG industry in India.

a) ITC Ltd.With a market capitalization of 137,000 crores.

b) Hindustan Unilever Ltd Subsidiary of Unilever Ltd. It has a market capitalization

of 61,000 crores.c) Nestle Ltd. Nestle India is a subsidiary of Nestle S.A. of Switzerland. Has a market

capitalisation of 35,000 crores.

d) Dabur India LtdDabur India Ltd is the fourth largest FMCG Company in India withMarket Capitalisation of 16,000 crores.

e) United Spirits Ltd. - The market capitalisation of the company is 13,000 crores. Thecompany was earlier known as the McDowell & Co.

f) Colgate Palmolive (India) Ltd.Has approx. 11,000 crores as the market capitalisation.

g) Godrej Consumer Products Ltd. - Has approx 11,000 crores as the market capitalisation.

h) TATA Global Beverages Ltd.- Has approx 6,000 crores as its market capitalisation, it isthe second largest Tea Company globally.


9/23


6. AN ORGANISATION IN THE INDUSTRY

One of Indias Most Admired Companies

ITC Limitedwhich previously stood for Imperial Tobacco Company one of Indias foremostprivate sector companies with a market capitalization of nearly US $ 18 billion and a turnover US $4.75 billion. As such ITC is a group which has various diversified business.

ITC has been rated by BCG amongst top 10 Consumer Goods companies in the world in terms of

Total Shareholder Returns (TSR). It is one of the foremost in the private sector in terms of : - Sustained value creation (BT-Stern Stewart survey) Operating profits Cash Profits Ranks No. 4 among Indian listed Private Sector Companies by market cap.

In addition to above, ITC is one of Indias most valuable and admired companies in FMCG sector

7. BUSINESS OPERATION OF ITC

(a)Traditional business:- Traditional business comprises of following sectors:-

Cigarettes Hotels Paperboards Packaging Agri-Business- ITC is the largest exporter.

In addition to the traditional business, ITC has now forayed into the following sectors and isincreasingly gaining market share:-

(b)Nascent business

Packaging Food & Confectionery, Branded Apparel & products Greeting Cards. Information Technology Cigarettes


10/23


ITCS CIGARETTES BUSINESS

ITC has Market leadership in cigarette business with powerful brands acrosssegments.

Extensive FMCG distribution network World-class state-of-technology and products

Exciting long term growth potential

BRANDED PACKAGED FOODS

ITC has number of branded packaged foods up its sleeve like Aashirvaad Atta, SunfeastBiscuits, etc. Further a number of innovative products in the pipeline leveraging the capabilities ofthe ITC R&D Centre. At present it is a market leader in India with various differentiated &innovative products in branded packaged foods.

LIFESTYLE RETAILING

ITC entered into the lifestyle retailing with Wills Lifestyle brand which is presently ratedamongst the top 5 Luxury brands in the country. Upmarket product range available in exclusiveWills Lifestyle stores (56) and multi-branded outlets/ large format retail stores across the country.Further, it has Strong distribution network in place for the mid-market brand John Players

EDUCATION & STATIONERY PRODUCTS BUSINESS


11/23


Education & stationery products business of ITC is mostly commoditized.Offers opportunity for branding. Classmate brand already the most widelydistributed brand in India. Branded Copier Paper Paperkraft footprint beingenhanced.

SAFETY MATCHES

ITC one of the major players with current industry size of Rs. 1250 crores p.a. Product AIM isIndias largest selling Safety Matches brand. ITC has successfully acquired WIMCO Ltd. by RussellCredit and has Key brands like Homelites, Ship, Cheetah Fight etc.

INCENSE STICKS (AGARBATTIS)

ITC markets its brands with value added products across each price point. ITC productMangaldeep is the second largest national brand in the country. Fragmented supply base due toreservation policy for small scale industry.

PERSONAL CARE PRODUCTS

Current market size estimated at over Rs. 29000 crores (growing at 12% p.a.). ITC presenceestablished in Body Wash (Soaps, shower gels) and Hair Care (Shampoos, conditioner) categorywith Portfolio approach straddling all consumer segments with 4 umbrella brands:-

Essenza Di Wills (Prestige) Fiama Di Wills (Premium) Vivel Di Wills and Vivel (Mid) Superia (Popular)

OVERALL INSIGHT TO ITC LIMITED


12/23


SEGMENT ANALYSIS

SEGMENT DOMINANCE % CONTRIBUTION

REVENUE PBIT

Cigarettes 70% share 77.0% 87.7%

Paper & Package. Packaging boardNo. 1 inAsia

7.0% 10.7%

Agri business 1 of the largest exporters fromIndia

4.3% 3.7%

Hotels ITC Group rank No.2 4.4% 5.4%

CAGR DURING FY 2010-11


13/23


Category CAGR Growth Parameters

Cigarettes 10.9% Pricing power

Hotels 22.7% Inward traffic, occupancy

Paper 17.2% Capacity utilization, value added products

Agri business 34.3% E-choupal, choupal sagar

FMCG-Other 60.2% Fast track, decent share

ITC has been leveraging its strength through diversification thus creating:-

Creating multiple divers of growth Unmatched distribution reach, Superior brand-building capabilities, Effective supply chain management and acknowledged service skill in hotelier.

8. IT -IMPLEMENTATION TRACK RECORD

ITC overall has 11 businesses with all total 200 manufacturing locations and comprising of20,000 employees. Over the past few years there has been exponential growth in godowns/warehouses.

One of the challenge for ITC has been effective deployment of IT to ensure sustained

exponential business growth. This IT challenge has been met through Structuring and Planning ofIT implementation. The IT deployed by ITC is worth over Rs 300 Crore / year.

8.1IT HIERARCHY


14/23


(a)GROUP CIO- Overall head of IT dept ITC

(b)CMC- Stands for Corporate Management Committee. It is the apex body of ITC whichreviews :-

Annual blueprints all 11 division Tech purchases Risk mitigations

(c)IT STEERING COMMITTEE Each ofITCs 11 business verticals has an it steeringcommittee that works closely with the vertical to ensure:-

Efficient delivery, Sustainability New technology is in line with overall it plan.

8.2 WORKING OF IT HIERARCHY

Part of the structure that keeps ITC's gigantic IT machine moving is that each businessunit (BU) creates a multi-function planning taskforce - which includes IT managers - toundertake an annual business planning exercise.

The yearly huddle introduces a comprehensive IT plan and roadmap as part of thedivision's overall business plan. Though ITC isn't a holding company in a literal sense forits group subsidiaries, it acts as one when it comes to budgetary allocations.

Each if ITC's 11 business also has its own IT steering committee that works closely withthe businesses. The committee, with the group CIO, ensures efficient delivery,sustainability, and also that new technology is in line with an overall IT plan.

The yearly blueprints turned out by the 11 divisions are reviewed by a CorporateManagement Committee (CMC), the apex body at ITC. Its responsibilities includemitigating the risk of technology purchase.

This pyramid-structure of decision-making is replicated in the IT setup across the group.Each of the eleven business units has a separate IT team and an IT head who reports tothe unit head.

CIO is responsible to ensure that the technology is right, the resources allocated areappropriate and the funding is sufficient. CIO, with the help of separate teams, also looksinto issues like technology upgrades and evaluation, annual budget planning and centralprocurement across the group.

The organization also realizes that some projects have a pan organization impact andhave to be deployed across all divisions. These large projects are looked into by ITC'sCMC. It is headed by ITC's director of finance, who reports to the CMC.


15/23


8.3CLASSIFICATION OF IT PROPOSALS

TYPE REMARKS

TRANSFORMATIONAL

EACH CATEGORY HAS ACCESSTODIFFERENT RESOURCES & BUDGETS

ENABLEMENT

ENRICHMENT

Similar to Vital-Essential-Desirable analysis8.4DEPARTMENTS OF ITCS IT DIVISION

DEMAND-SIDE IT TEAM SHARED SERVICES TEAM

Teams working with specific business units.Separating the two ensures that demand-side

it doesn't suffer because of backend issues.

Work at the corporate level under the group CIO. Shared services team provides end-to-end it

management services, including creation andrunning of data centers, maintaining the VPN,databases, storage, archival, security management,network management, etc.

8.5HARDWARE AT ITC

On an average, 44 processors of computing capacity is employed by the business to hostapplications or enhance the performance of existing applications

The heart of ITC's operations: its datacenter has 650 racks


16/23


8.6 VIRTUALIZATION

The data centre at ITC had 650 racks and still it was so crowded there wasn't enough space for newprovisions. It was also pushing the datacenter's cooling and power capacities to their limits. In orderto meet these challenges, one elegant solution adopted by ITC was Virtualization. The technologyhad the added benefit of creating a more centralized, flexible IT infrastructure. Initially theutilization levels of existing servers were assessed. Those with the least usage were virtualized. Thevirtualization license and additional storage cost ITC just under Rs 30 lakh. But the project, whichwent live in January 2008, saved ITC Rs 38.08 lakh in its first year. And it created savings of Rs12.77 lakh from the second year onwards.

In the immediate, it freed up costly datacenter space and the power and cooling needed to run 44processors. Just the cost of running those processors (without accounting for cooling expenses)reduced annual power consumption by 72,270 KW.

8.7 ERP AT ITC

ERP at ITC isBest-Of-Breed, Bolt-On System. Standard ERP For Inventory Management with:-

Oracle e-Business Suite 11.5.9 Sapphire - R&D Export Management System - Export Documentation Power Apps - Payroll And Attendance

8.8 SPECIFIC IT INITIATIVES AT DIVISIONAL LEVEL

8.8.1 FIRST MANUFACTURED-FIRST-OUT (FMFO)

Initiative to barcode produce at the warehouse itself using RFID (Radio FrequencyIdentification) at item level using RFID Tunnel.


17/23


Enables implementation FMFO strategy, items manufactured first -shipped out first Tagging output/person/day rose from 300 to 3000

8.8.2 PUSH MISAn integrated IT system which will gather and push information onto ITCs salesmens

laptops. For instance, if a salesman is covering 10 outlets of a region, every evening ITCssystems will push onto his laptop the sales, distribution and requirements of that region and alsothe target to be met.

8.8.3 FASTREACT EVOLUTION

At ITC's Rs 4.5 crore Lifestyle Retailing Business Division (LRBD) status of each order isvisible to all stakeholders on a common scoreboard to enable prioritization of work.

8.8.4 FREEBORDERS PLM

Wills Lifestyle and John Playersthe flagship brands of ITC LRBD, has implementedFreeborders Product Lifecycle Management (PLM) solution to streamline all apparel productdevelopment activities, from concept to delivery.

8.8.5 PROJECT DHANUSH

To track every bale of tobacco leaves from the point of origin to the end product, ITCimplemented an ERP system that is updated using handheld terminals from 70 rural locations inAndhra Pradesh and Karnataka.


18/23


8.8.6 E-CHOUPAL: STRATEGIC THRUST

E-Choupal is an ITC initiative to connect the farmer directly to the market place by

eliminating the middle-man. Complementary benefit has been empowerment of the farmer. The

e-Choupals, information centers containing a computer linked to the Internet, represent an

approach to seamlessly connect subsistence farmers with large firms, current agriculturalresearch, and global markets. The following activities are undertaken through e-Choupals:-

Procurement: Cost & Quality Optimization Rural Distribution Financial Services Rural Retail


19/23


9. FUTURE SCENARIO BUILDING FOR FMCG INDUSTRY

The following are the key areas for FMCG industry to do scenario building in these areas:-

(i) Supply Chain Evolution:- Supply Chain evolution in the consumer goods industry hasincreasingly become complex because of the various developments in the market place. In marketswhere retailers are large and powerful, they tend to drive the channels and hence the supply chainnetwork will require the increased use of technology, more effective distribution and better usage ofinformation. With regards to supply chain, some of the key processes can be optimized for cost byoff shoring - Sourcing is one prime example, another is the adoption of new technology such asmobility devices, RFID etc.

(ii) Consumer Centric Innovation:- As consumers become more demanding they look for newand innovative products, in attractive packaging, offered to them in more convenient ways to shop atlower prices. The modern retail trade not only broadens consumer choice but also drives industryconsolidation. This places enormous pressure on suppliers to maintain margins and retain consumerbrand franchise, particularly with the emergence of private label brands in more mature markets.While Innovation is a key driver of consumer goods companies, seldom does one get to see anybreakthrough innovation. Typically innovation tends to be incremental enhancements either in theproduct design or delivery or in the channel formats. Companies need to be constantly aware of thischallenge and put mechanisms in place to nurture innovation both within the organization andexternal to it.

(iii) Improving Operational Execution:- Consumer goods companies require excellence in fourareas to sustain their leadership brand marketing, sales, innovation and the supply chain. Theindustry benchmark of performance has increased dramatically over the last decade in each area. Thewinners of the future will be the ones that not only adopt these best practices and raise the bar morequickly but also those that bring in new practices offer borrowed from other industries.


20/23


10. STRATEGIC USE OF IT

IT landscape of the Consumer Goods Industry that has been described in figure below reveal thekey strategy for IT application in the FMCG industry. The red boxes indicate the processes forwhich firms have to focus in creating specific offerings as they are the ones that yield the maximum

ROI to Consumer Goods Companies in the current business scenarios.

The other applications that will strategies the use of IT in the industry are as below:-

(i) Product Lifecycle Management (PLM)

Increased process velocity that ensures that products and promotions reach the end customersfaster is one of the key capabilities that the Consumer goods manufacturers need to equipthemselves with. This is achieved by PLM solutions. PLM solutions enable strategic aligns firmswith the leading Product Lifecycle management vendors and thus making use of variety of servicesused by Consumer Goods Companies ranging from PLM consulting , Product Evaluation toImplementation and outsourcing.

(ii) Sourcing and Procurement

IT platform based outsourcing to leverage its alliances with the market leaders in ProcurementProducts. This will involve offering full service outsourcing program that provides end to end IS,


21/23


ADM and BPO services to enable global outsourcing for CPG companies. The following are theapplication areas that the sourcing program would encompass:-

Buying and Marketing Replenishment and Logistics

Finance E Commerce Enterprise Collaboration Technology enablers

(iii)Supply Chain Management

Software solutions that cater to various challenges faced by Consumer Goods manufacturers inthe current environment like:-

Supply Chain Diagnostics and a Transformation framework aiming at redesigningprocess and systems across supply chain towards achieving break-through performance

Collaborative Planning, Forecasting and Replenishment (CPFR) solutions towardsimproving supply chain planning process in collaboration with the major retailers

Logistics Management towards better supply chain execution with focus on transportation Warehouse Management towards better supply chain execution with focus on DC

operations

(iv) Future IT Technologies like application development with SOA and Web 2.0

Unlike many heralded technology advances, service-oriented architecture (SOA) is fulfilling its

promise, often delivering significant ROI within relatively short timeframes. The rewards are not

just financial but also SOA allows organizations to cross over traditional line-of-business (LOB)

barriers to deliver integrated, customer-facing services. SOA will continue to be widely adopted

as the architectural style for new application development investments. SOA enables firms to

take disparate capabilities within their applications and transform them into services that can be

leveraged for reuse in more customer-centric ways.


22/23


(v) The increasing dependence on global resources and distributed partners will drive a need

to adopt standard approaches that are common across industries and geographies. Internally

developed methods and specification approaches will no longer be effective. Entity-relationship

modeling, Unified Modeling Language (UML) and the Unified Process lifecycle are some

examples.

11. IT VISION & IT STRATEGY OF ITC

IT Vision of ITC is to enhance role of IT in all its business which will ultimately address

customer pain points through innovative solutions thus optimizing cost and increasing efficiency in

all businesses leading to maximum returns.

To meet this end and be a market leader in all the diverse business segments, ITC has adopted

following key IT strategies in respective fields:-

(i) Data centre

(ii) Virtualization using cloud computing

(iii) ERP solutions

(iv) RFID technology for implementation of First Manufacture First Out strategy in theLifestyle retail sector

(v) Push MIS- An integrated IT system which will gather and push information onto ITCssalesmens laptops.


23/23


(vi) PLM- Product Lifecycle management solutions for business likeLifestyle retail sector

(vii) Project Dhanush Implementation of ERP system that is updated using handheldterminals from 70 rural locations in Andhra Pradesh and Karnataka for tracking every baleof tobacco leaves in the ITC India Leaf Tobacco Development (ILTD) division.

(viii) E-Choupal - an intelligent blend of applications like CRM and supply chain managementfor farmers in village and as an effective supply sourcing technique for ITC retail.

12. SUMMARY

Retailers driving down prices and subsequent costs, place enormous pressure on suppliers tomaintain profit margins. This drives the need for continuous internal improvements, including thefollowing:

Supply chains must be optimized to produce the required levels of customer service at thelowest possible

Cost Assets must be rationalized to work at maximum efficiency Demand driven manufacturing must be used to ensure that the optimum response can be

made for both fast and slow moving new products and supported by world-class Sales andOperations Planning processes and systems.

Execution capabilities must be flawless and cater for the variations that will occur.This requires FMCG companies to be both agile enough to change rapidly in addressing these

new concerns and flexible enough to ensure that they can respond quickly without waste. Thislowers costs and reduces total cycle time for all processes, applying particularly to S&OP, planning,new product introduction, and execution processes. In all this IT has been an enabler and been animpetus in taking the FMCG company through the exponential growth and will continue to do so in

future. Companies which will leverage the IT to the maximum undoubtedly will be the leaders in theIndustry.

ITC MIS Project

Documents

Transcript of ITC MIS Project