You are on page 1of 17

MADRAS CEMENTS LTD.

A REPORT ON ERP IMPLEMENTATION

ERP GROUP PROJECT Submitted to Dr. Neetu Ganapathy Submitted by: Group IV Veena U. (PGDM No. 12116) Vishak R. (PGDM No. 12119) Harish K.P. (PGDM No. 12140) Vinay Prakash (PGDM No. 12118) Dhrubajyoti Sahu (PGDM No. 12136)

NOVEMBER 28, 2013


SDMIMD

ERP Implementation at Madras Cements

Contents
1. About the Company ............................................................................................................... 2 2. IT initiatives of MC ............................................................................................................... 3 3. Scenario before ERP .............................................................................................................. 3 4. First Implementation of ERP and its Failure ......................................................................... 4 5. Implementation of ERP.......................................................................................................... 5 6. Critical Success Factors ......................................................................................................... 6 6.1. Top Management Support............................................................................................... 6 6.2. Reengineering ................................................................................................................. 6 6.3. Integration ....................................................................................................................... 7 6.4. Cost ................................................................................................................................. 7 6.5. Time ................................................................................................................................ 7 6.6. Modules........................................................................................................................... 7 6.7. Vendor............................................................................................................................. 8 6.8. Consultants...................................................................................................................... 9 6.9. Core Committee and Steering Committee ...................................................................... 9 6.10. Training ......................................................................................................................... 9 7. Scenario after Implementation ............................................................................................... 9 8. Recent Glory ........................................................................................................................ 12 9. Conclusion ........................................................................................................................... 16 Bibliography ............................................................................................................................ 16

1
SDMIMD, Mysore

ERP Implementation at Madras Cements

1. About the Company


The Ramco Cements Limited (Formerly Madras Cements Ltd.) is the flagship company of the Ramco Group, a well-known business group of South India. It is headquartered at Chennai. The main product of the company is Portland cement, manufactured in five stateof-the art production facilities spread over South India, with a current total production capacity of 13.0 million tonnes per annum (MTPA). The company is the fifth largest cement producer in the country. The company also produces Ready Mix Concrete and Dry Mortar products, and operates one of the largest wind farms in the country. Integrated Cement Plants: Ramasamy Raja Nagar, Virudhunagar, Tamil Nadu Alathiyur, Ariyalur District, Tamil Nadu Ariyalur, Govindapuram, Ariyalur District, Tamil Nadu Jayanthipuram, Andhra Pradesh Mathodu, Chitradurga District, Karnataka Grinding Units: Uthiramerur, Kanchipuram District, Tamil Nadu Valapady, Salem District, Tamil Nadu Kolaghat, Purba Medinipur District, West Bengal Packing Terminals: Nagercoil Packing Unit, Kumarapuram, Aralvaimozhi, Kanyakumari District, Tamil Nadu Hyderabad Packing Plant, Pochampally Road, Malkapur, Nalgonda District, Andhra Pradesh State-of-the-Art Research Centre: Ramco Research Development Centre (RRDC), Chennai

2
SDMIMD, Mysore

ERP Implementation at Madras Cements

2. IT initiatives of MC
The top managers of Madras Cements, including CEO Venketrama Raja and CFO A.V. Dharmakrishnan, were becoming increasingly aware that in order to gain a competitive advantage in cement manufacturing they would have to lower their cost structure. This would require accurate, transparent, and timely information, which depended on an effective IT structure. Madras Cements had a history of investing heavily in its IT infrastructure at each of its plants in order to help monitor and control costs in a systematic function. With the active and enthusiastic support and guidance provided by the CEO, Venketrama Raja, the company had launched IT-related projects as early as 1983. Raja had always encouraged the management team to develop IT strategies that would provide a competitive edge for the company. In the 1980s, due to price controls and a permit system for cement, Madras Cements had to deal directly with thousands of cement customers who wanted only 5 tons or 10 tons. The distribution system and the underlying accounting system became very complex, and as a result Madras Cements soon adopted technologies and an efficient accounting system to overcome those complexities. The company was one of the first in the cement industry to invest heavily in developing IT infrastructure. As early as 1983 it set up a UNIX-based Mini running COBAL. This move marked the beginning of the IT revolution in the company. A computerized payroll, finance, inventory, and invoicing system was developed at the R R Nagar plant in 1985 and Madras Cements brought on a dedicated IT staff at the manufacturing plant to support its growing IT infrastructure. Soon, the same model was replicated at the Jayanthipuram, Alathiyur, and Mathodu plants as they became operational. In addition to having a self-contained IT infrastructure, each plant also had an internal IT organization to support the deployed infrastructure. Further, to match global standards, Madras Cements adopted state-of-the-art technologies in its manufacturing units. This included deploying fuzzy logic software system for process controls, installing programmable logic controllers, using vertical mills for cement grinding, and adopting advanced X-ray technology for ensuring quality control. Once the process of adopting IT started in the 80s, Madras Cements kept evolving its technological process. It later arrived at the point where almost all of the companys critical business processes were running on IT solutions.

3. Scenario before ERP


Lack of integrated units: By the mid-90s, the IT infrastructure and the supporting organization had grown quite differently at each of the four plants. As the company grew, its previous information management systems were not able to keep up with the multi-functional and multi-factory setup. Each plant was essentially a closed system with its own set of software, platforms, and processes. There was no sharing of information between the plants. Basically, several 3
SDMIMD, Mysore

ERP Implementation at Madras Cements

islands of information/systems got generated. It led to problems in capacity planning. The utilisation rate was poor and decision making was not accurate leading to wastage. Different metrics: As a result of the disparate processes and technologies, the corporate headquarters received different metrics from each plant. Not only were the metrics dissimilar, each plant measured different things as well, making it very difficult to make comparisons or benchmark. Coordination and inconsistent information: Coordination between departments and people was becoming problematic and complex. In addition, the information that was available was neither consistent nor transparent due to a lack of standardization and transparency of data. People used their own formulas and formats for analysing and interpreting data and generating reports. Madras Cements wanted to bring everyone on to one information platform by achieving transparency of data across units and departments. It wanted to standardize the way people looked at data, understood it, and interpreted it, so that they spoke the same language as far as data was concerned. The companys systems were not able to manage these growing complexities. Corporate headquarters was spending a significant amount of time and resources to standardize the reports that it prepared for management. The reports had to be consolidated manually at the corporate level, which meant long delays and increased potential for human error. Each report that was requested by management required a couple of days of work by analysts to present the available data in the format requested. Not only were the requested reports not available in real-time, their reliability was questionable, as the underlying information was not standard across plants. So not only was Madras Cements expending resources in creating basic management reports, the management was making decisions based on inadequate, incomplete, and inaccurate information. It was very clear to the senior management that this situation could not continue for long, and significant efforts would be required to standardize processes across plants and establish the technology infrastructure needed to enable them to monitor and control costs effectively.

4. First Implementation of ERP and its Failure


When Madras Cements expressed that it was experiencing difficulties in its day-to-day operations due to the differing systems and processes at its plants, Ramco Systems offered to assist Madras Cements by deploying its recently completed e.Applications. 1.0 ERP suite to integrate the different IT islands at each plant and the corporate headquarter. Employees of Madras Cements were aware of the difficulty in successfully implementing ERP and were hesitant to embrace the proposed ERP system. Even some senior managers were reluctant to sign off on the ERP implementation exercise. Nevertheless, a decision was finally made to allow Ramco Systems to deploy its e.Applications 1.0 suite at Madras Cements. However, the implementation of the ERP system was thoroughly unsuccessful. 4
SDMIMD, Mysore

ERP Implementation at Madras Cements

There were potentially numerous reasons for which the initial implementation did not work. First was the organizational level challenge. Senior management had not been directly involved in the project as the implementation had been viewed more as an IT upgrade rather than something that would affect the business operations of the company. The e.Applications 1.0 ERP system, while being a completely developed system, had never been tested in a production environment and it was also not customized. Users were not fully trained in the use of ERP data for decision making. They were not aware of the importance and the impact of the integrated, online nature of the information available through ERP. They even felt that they would be better off without ERP.

Due to all of these issues, the implementation of e.Applications 1.0, while benefiting some functions, did not provide any overall business benefits. The senior management at Madras Cements took this failure as an opportunity to start to rethink their overall approach to managing technology. At an executive meeting, managers took external inputs and internal suggestions and discussed how they could leverage collective learning from the unsuccessful implementation. The analysis of the failed ERP implementation effort by Madras Cements revealed that the main cause of the failure had been that more focus was put on technology than on the needs of employees and executives. The management recognized that the primary hurdle had been peoples reluctance to give up the current culture and practices of information use. After identifying the causes, Madras Cements decided to undergo a second ERP implementation. When Dharmakrishnan (CFO) announced his intention to lead the new ERP implementation efforts at Madras Cements, Ramco Systems was ready to assist its sister company with a revised version of its e.Applications suite, called the e.Applications 3.0 system.

5. Implementation of ERP
Dharmakrishnan quickly put together an implementation team that consisted of crossfunctional members, including analysts from corporate headquarters, IT personnel, functional experts, and implementation experts from Ramco Systems under the overall guidance of the general manager of IT. Additional resources required from the different functional areas and from the respective plants were brought in on an as-needed basis. The team decided to follow the phased approach for ERP implementation. A phased approach called for rolling out an ERP package at one location first and one module at a time. The benefit of this approach is that if an error is detected at one location it can be fixed before the whole ERP package is deployed at all locations. In addition, with a phased approach the resource requirements are lower because the implementation is spread over a longer time frame. Further, the experience gained from implementing one module or location can be applied to the next module or location being readied for deployment.

5
SDMIMD, Mysore

ERP Implementation at Madras Cements

A phased approach presented an opportunity for progressive implementation of ERP with minimum risks. This would allow for gradual adoption at the user level and training on one module at a time. The only drawback of this approach was that it essentially required the company to run its legacy system and the new ERP system in parallel until all the sites had the ERP package deployed. The cut-over time was prolonged but inevitable. In November 1999, all the processes were fully tested and in place and Ramco Systems started deploying the e.Applications 3.0 at R R Nagar, the oldest plant. The goal was to deploy the complete system at this facility first, stabilize the release by working out all kinks and bugs, and then take the stable release to the next manufacturing facility. A month after successful deployment of e.Applications 3.0 at R R Nagar, Jayanthipuram went online with the e.Applications suite. In the next few months all of the plants and the corporate headquarters were successfully running and utilizing e.Applications 3.0.

6. Critical Success Factors


6.1. Top Management Support The top managers of Madras Cements, including CEO Venketrama Raja and CFO A.V. Dharmakrishnan, were becoming increasingly aware that in order to gain a competitive advantage in cement manufacturing they would have to lower their cost structure. This would require accurate, transparent, and timely information, which depended on an effective IT structure. To ensure that the fruits of the ERP system reached all the levels, a special report was added to the MIS system, which showed the access pattern of various users and their use of ERP and MIS reports. Top management, including the chairman, monitored this data and sent gentle reminders to those who were not utilizing the ERP system properly. One-to-one follow-up sessions were also held with key users to get field-level feedback to sort out any implementation problems. 6.2. Reengineering The first task of the core team was to map out existing processes across nine different functional areas and modules. The team quickly found that the processes were different for each plant. These separate processes were taken as input and used to create a set of to be processes, which would be standard across all the plants. Dharmakrishnan spent six months with the core team discussing the overall direction of the business processes. Subsequently the team took charge of mapping existing processes, identifying the opportunities for improving processes, and converting them to to be processes. The team had to also account for the fact that the communications infrastructure to link the plant sites was not robust enough to allow for every transaction to be executed in real-time. Team members had to design the processes in such a way that approximately 95% of processing happened locally, within the local IT infrastructure of each plant. The major task was to map existing processes across nine functional modules such asfinance, sales, logistics, CPP (Continuous Process Production), ore management systems, maintenance, 6
SDMIMD, Mysore

ERP Implementation at Madras Cements

customisations for sales and logistics and HR, and to create a standard set of to be processes, and then test them. The team took about a month per module to map the existing processes and convert them to the to be processes. During this time, the to be processes were also tested. 6.3. Integration Phased Approach: The team decided to follow the phased approach for ERP implementation. A phased approach called for rolling out an ERP package at one location first and one module at a time. The benefit of this approach is that if an error is detected at one location it can be fixed before the whole ERP package is deployed at all locations. In addition, with a phased approach the resource requirements are lower because the implementation is spread over a longer time frame. Further, the experience gained from implementing one module or location can be applied to the next module or location being readied for deployment. A phased approach presented an opportunity for progressive implementation of ERP with minimum risks. This would allow for gradual adoption at the user level and training on one module at a time. User acceptance and willingness to effectively use the system, as outlined earlier, was something Madras Cements really wanted to address during this course of implementation. The only drawback of this approach was that it essentially required the company to run its legacy system and the new ERP system in parallel until all the sites had the ERP package deployed. 6.4. Cost The implementation of the ERP system brought few immediate benefits to Madras Cements. This, compounded with the fact that the implementation costs approximately Rs.10 million or $244,000 USD (William Davidson Institute, 2011), greatly upset the top management team. 6.5. Time The first failed attempt took place in 1990 when e.Applications. 1.0 ERP suite was deployed in Madras cements factory. It took almost nine years to set things straight for a successful implementation when e.Applications 3.0 was deployed at R R Nagar, Jayanthipuram (oldest plant) in Nov.1999 and then the following next eight months to complete the installation when all other plants were successfully utilizing this ERP to communicate within themselves and also with the corporate headquarter at Rajapalyam, Chennai, Tamil Nadu. The advanced web based Ramco ERP enterprise series, version 4.2 is in practice since Sep. 2007. 6.6. Modules MCL did not go about the entire deployment in a factory wise manner. Instead they chose module wise implementation. The commercial modules like marketing, sales and distribution, accounts, finance, order booking, invoicing etc. were deployed first, considering how directly these modules impact the benefits to users. Thereafter, for other factory related modules like production, inventory, maintenance and mining, MCL went ahead one unit at a time, implementing it completely for that unit.

7
SDMIMD, Mysore

ERP Implementation at Madras Cements

(Source: Slide share, Dec. 2012) 6.7. Vendor ERP as a product was being offered by Ramco Systems, a sister company within the Ramco group. Therefore, the vendor selection process was also subpar. Packages from other ERP vendors were not seriously considered as the top management felt that choosing a package from their group company would ensure smoother implementation and better servicing. In case of any problem they would be able to fix it faster since the software is supplied by a group company. It was also felt that implementing Ramco e.Applications would ensure smoother integration with other Ramco applications such as the real time system and open cost mining system used by MCL. Madras Cements was one of the few manufacturing companies in India with an in-house IT team of this size and capability. It had developers who focused on emerging technologies for other industries as well as another group that provided technical and operational support to the ERP users. An in-house data center hosted all the servers and provided support around the clock. The IT team also included information security personnel, because Madras Cements believed that security of data was very important for IT projects. Because of its in-house talent, Madras Cements felt it was in a position to address any challenge that might arise at any point.

8
SDMIMD, Mysore

ERP Implementation at Madras Cements

6.8. Consultants Madras Cements IT team was the enabling force behind the ERP implementation and the innovative systems in the Beyond ERP project. The team was headed by N. Varadarajan, senior general manager-IT, with the help of the deputy general managers Murugesan and Muthukrishnan. The IT group consisted of about 60 professionals between 25 and 30 years old. During and after the successful ERP implementation, the department took a more central role in the company. Madras Cements has chosen to build the IT expertise internally based on their belief that the managers of Madras Cements best understand the problems and opportunities in their business. 6.9. Core Committee and Steering Committee Dharmakrishnan quickly put together an implementation team that consisted of crossfunctional members, including analysts from corporate headquarters, IT personnel, functional experts, and implementation experts from Ramco Systems under the overall guidance of the general manager of IT. Additional resources required from the different functional areas and from the respective plants were brought in on an as-needed basis. 6.10. Training In order to prepare the rest of the company for the coming ERP implementation, Dharmakrishnan initiated a recurring program to train users on the ERP system. The training was primarily provided by Ramco Systems and covered a basic overview of ERP as well as details about the impact of ERP on each of the nine modules. Every employee of Madras Cements underwent the basic training. The training, apart from educating the employees, also served to allay any latent fears about job loss among the employees.

7. Scenario after Implementation


When the ERP suite was implemented, there were built-in reports incorporated in the system. However, many users felt that these canned reports were inadequate for their analysis and decision-making processes. Since the real success of ERP was in the ways it would be used to improve operational efficiency and decision-making, Dharmakrishnan emphasized that the organization customize the reports to meet user requirements. He formed a team of IT analysts within Madras Cements headed by Mr G. Murugesan for this purpose. The team was tasked with the following Develop user-friendly reports that could be understood by every employee Interface all non-ERP applications such as Weigh Bridge, attendance recording system, and fixed deposits with the ERP system Capture process data and incorporate them into the ERP system in real time Train the users in proper and efficient use of reports Study and improve security of data

The team developed a set of Management Information Systems (MIS) reports under the guidance of Dharmakrishnan and the IT staff. Users were also trained to utilize such reports.

9
SDMIMD, Mysore

ERP Implementation at Madras Cements

A significant number of these reports were designed based on the information needs of managers. ERP generated data that was used to both reduce inventory and optimize logistics. Traditionally, Madras Cements had maintained 40 warehouses loaded with various cement products to supply its distributors. With the new analysis based on ERP data, Dharmakrishnan concluded that Madras Cements needed only 9 warehouses to maintain its standards of delivery. However, this conclusion was opposed by some of the old guard. They voiced their opposition to the plan to reduce the warehouses by referring to the state regulation that prevented delivery trucks from entering and leaving major markets during business hours. They argued that all the warehouses were needed to ensure deliveries. Dharmakrishnan and his team did further analysis on this and demonstrated that Madras Cements needed only nine warehouses. They made the reduction of warehouses, which resulted in a cost saving in the range $9,756,097 plus (William Davidson Institute, 2011). This enabled the company to be the only one in its field to make profits during the years 2003 and 2004, when all its competitors were taking huge losses. Following this episode, the opposition to the ERP system weakened and Dharmakrishnan was quickly able to bring about additional benefits, including customer satisfaction, plant efficiencies, and improved transparency. Customer satisfaction: ERP provided a uniform system across plants and corporate headquarters, which enabled Madras Cements to follow up on customer orders to ensure higher customer satisfaction. In fact, after ERP was implemented, orders were shipped in less than 24 hours of being received. Plant efficiency: Madras Cements could benchmark one plants performance against other plants, thereby ensuring better efficiencies. Management had a real-time view of every aspect of the business and instead of waiting to receive and review reports, managers could act upon the real-time information they had and improve the business. Although there was some resistance from the business groups when they were asked to change how they operated, the resistance quickly dissipated once they realized that improved IT was leading to significant cost savings. Finally it made Madras Cements to evolve as the lowest cost cement producer in the cement industry in India. Successful deployment of e-Applications 3.0 across all the plants and the corporate headquarters resulted in significant cost savings and efficiency improvements, which are mentioned in the following table: Production Overall operations consistency was achieved, and productivity was enhanced from 5 to 10 tons per hour. This brought about recurring annual savings of about $1.8 million. By continuously monitoring factory operations using real-time data 10
SDMIMD, Mysore

ERP Implementation at Madras Cements

Materials

in ERP, the power generator utilization factor was increased by 10% and electricity consumption was reduced by 10 units per ton. This resulted in recurring annual savings of about $4 million. Expected cement bag weight was achieved for 99% of production, resulting in recurring annual savings of about $2 million. Weight variation in the cement bags was reduced from 40% to 2%, resulting in net savings of $2 million annually. On average, variable costs decreased by $6 per ton. Better prices were realized from the vendor by comparing the unit prices, available discounts, and better credit periods. Inventory levels were reduced by monitoring materials received and materials consumed within the committed time. This resulted in recurring annual savings of approximately $0.45 million. Variable costs were analysed on daily basis for each process centre. Fuel efficiency was analysed with caloric value and the market price of the items, arriving at an economical fuel mix. Trial balances of all the factories were analysed with greater detail. All administrative overheads were reduced without affecting operations. Reduction was achieved mainly by process redesign, for example, with TT charges (bank charges for non-local transactions); all major payments were now made locally by negotiating with the excise/sales tax/electricity authorities rather than transferring the funds to the factories. Reduction of administrative expenses resulted in a recurring annual savings of about $0.45 million. 100% adoption was achieved for the costing system, which updated the P&L for the entire firm in real time upon entry of a transaction. With the close follow-up of all pending orders, orders could be executed within 24 hours. This led to increased customer satisfaction. Transporters freight was analysed on daily basis. Based on this, logistics were derived. Stock transfers to depots were handled without any re-handling process. Analysis of ERP data led to closing down more than 90% of stock points, which enabled the company to save on stock holding, transportation, and re-handling. This resulted in a recurring annual savings of about $3.6 million. Performance was analysed on a mine, equipment, and shift-wise basis. Based on this analysis, about 60% of heavy equipment was withdrawn from the operations due to poor performance or underutilization. The number of shifts was brought down from three to two. Re-handling of materials was brought down to almost negligible

Management Accounting Finance

Sales

Overall

11
SDMIMD, Mysore

ERP Implementation at Madras Cements

from an earlier rate of $0.40 per metric ton. This resulted in a recurring annual savings of about $0.7 million. The company realized $22 million in cost savings overall as a result of successful ERP implementation, with more expected to come. (Source: Michigan Ross School of Business Case Study, May 2011)

8. Recent Glory
Having tasted success in the ERP implementation, the company continued to use the application until 2008, when they felt the need to improve the system. That is when the company decided to move from their decentralized and desktop-based ERP 3.0 system to the web-based and centralized 4.2 system. It took just six months to install the new system and it was a smooth transition, thanks to the experience the team had gained in the previous implementation and the assistance from the vendor Ramco Systems. Bridging the gap between user expectation and the vendor proved to be the key for facilitating such a transition. Special reports showing the access pattern of various users and their usage of ERP and MIS reports was monitored by the top management, including the chairman. Follow up sessions were held with key users to give field level feedback and sort out any implementation problems. A project called Beyond ERP was launched to build innovative systems that would interface with ERP. It was intended to help the company monitor, streamline, and secure its processes and maximize the potential of ERP. Enterprise mobile computing was one of the components. The in-house system integrated PDAs and mobile phones to the ERP system to facilitate processes such as ordering, invoicing, and packslipping. It proved quite useful for mobile employees such as sales professionals. Close to 80% of the orders were booked through PDAs. A comparison is shown below for the impact that it made to various processes.
Before Enterprise Mobile Computing After Enterprise Mobile Computing At any point of time a salesperson could use a PDA interactive information system to learn about a pending order, credit limit, etc., pertaining to a customer

Process

Impact

Pre-order information

The salesperson checked with the sales office or maintained his or her own paper database

Information ondemand and better customer satisfaction

Order booking

The salesperson called someone in the regional The salesperson could book office, who periodically an order through a PDA at booked orders into a desktop any time ERP

Empowerment of salesperson; customer satisfaction improved because of 24/7 order booking

12
SDMIMD, Mysore

ERP Implementation at Madras Cements

Confirmation of booked order

The salesperson had to contact the regional sales office by phone Order status was not available except through checking with the factory dispatch section There was a requirement for hardware and complicated MPLS lines or an alternative mode of connectivity Portability was a problem at railheads Invoices were not updated until the next day due to problems with connectivity at railhead

The salesperson could obtain order confirmation within one minute on a PDA Order status was constantly updated automatically in the PDA

Sales productivity rose with fewer unnecessary phone calls

Order status

Sales productivity rose

Depot invoices

The simple mobile GSM / GPRS connectivity became sufficient

Costs were saved and operations were simplified Online invoicing at railhead became possible Stock positions updated online; better decision-

Depot invoices

Portability was no longer a problem

Wagon dispatches

Invoices could be updated immediately upon dispatch

(Source: Michigan Ross School of Business Case Study, May 2011) MIS customized for mobiles enabled top management to access report 24X7, anywhere around the globe. Madras cements also leveraged the power of SMS by using push-SMS system to send data updates automatically to customers and top management officials. Compliance software generated reminders and alerts regarding statutory and operational compliances. Asset tracking mechanism was useful in handling requests for new hardware and planning hardware replacements. The interactive voice response (IVR) enabled an individual to acquire information from the database or enter data directly into the database over the telephone. A unified communication system is also on the cards where all communication technologies are integrated into one platform. About 30 locations will be connected through video conferencing using ISDN (Integrated Services Digital Network) and IP (Internet Protocol) based Aethra video conferencing system. Besides, the firm also uses Polycom audio-conferencing system. Internal collaboration systems are facilitated through enhanced e-mails, online meetings, Instant Messaging (IM) tools etc. Madras cement backed its IT reform by adopting a paperless office strategy thereby e-approval and online tracking of documents through a series of approvers and reviewers. This practice saved a lot of paper! The organization knew that installing a good ERP system was only the first step; the most important aspect would be to run ERP and the allied IT processes effectively and efficiently. The IT department set challenging goals for efficient IT operations and IT cost reduction. The following table shows the status of the IT cost reduction projects near the end of 2010. These

13
SDMIMD, Mysore

ERP Implementation at Madras Cements

goals had been met through optimizing inputs and service providers and improving supplier negotiations. Area Annual Cost (In Target for Status Thousands USD) Reduction 344 50% Achieved Connectivity 98 12% Achieved AMC 375 40% Achieved ERP Support 94 44% In Progress DR Site (Source: Michigan Ross School of Business Case Study, May 2011) Madras Cements was also undertaking a project to reduce the cost of replacing hardware and software licensing for the coming years. It planned to use technological advancements like cloud computing and virtualization for this exercise. The companys growth potential was hampered by the inability to visualise and levera ge the rich data generated from Ramco Enterprise Resource Planning (ERP) system off late. It was also difficult to understand the issues affecting operations and performances across the region. Information such as distributor performance comparison and location mapping of their wagon movements were difficult to visualise. The company needed a data visualisation solution, one that is easy to use, offered richer, dynamic, interactive graphics and that integrated with the Ramco ERP system. Introducing Jan2013, Ramco Systems used Google Maps to solve this problem. Google Maps Engine is a scalable, powerful and secure platform for building and publishing maps, using the power of the Google cloud. By superimposing the ERP data on to Google Maps, the result was a rich data visualisation tool that facilitated idea generation and improved productivity. This feature was attributed as the major factor of the 18% growth for the company when compared to 5% for the industry. It helped Madras Cements gain a 6-7 per cent market share in the Indian cement business. Google Maps also made it easier to identify and analyse performing markets with the potential for growth. Since implementing Google Maps, the company has successfully captured 20-30% market share of these markets. Management at Madras Cements uses Google Maps for visual analysis for monitoring benchmarks, identifying discrepancies and deviation. Google Maps serves as a tool to help them develop appropriate strategies for business growth. The sales team members have been provided with iPads that provides information ranging from competitor distribution networks in their areas to the best and worst performing dealers. This has enabled them to make faster sales strategies on-the-go. It also helped management improve their market penetration strategy and competitiveness as they could locate their cement warehouses and key customers on Google Maps vis--vis critical operation information, empowering them to devise effective supply chain strategies and enhance customer service. Keeping logistics costs low is a critical success factor in the cement manufacturing industry. Google Maps, together with their in-house SMS notification system and Ramco ERP solution, formed a communication infrastructure. This has helped the Madras Cements reduce penalties, losses and damages arising during the wagon clearance process by up to 70 per cent and improved consignment clearance time by up to 40 per cent. It has definitely been the differentiating factor. 14
SDMIMD, Mysore

ERP Implementation at Madras Cements

Madras Cements Ltd. keeps data from all transactional processes, including invoicing, cheque receiving and cheque issuing in its Ramco ERP system. However, reports were not generated from the ERP database directly, which is least indexed because of performance needs. Therefore, MCL was maintaining a separate database for reporting which is highly indexed. MCL was facing several challenges, as both databases were not synchronized. Plus, reports were not online and such offline data was affecting decision. Performance was also an issue as some data required access to a live server. As a result, the transaction operations were becoming slower. One time data extraction in the morning had worked well in the past for report generation. However, the unavailability of the current data resulted in making wrong decisions. MCL felt that the decision-making ability was hampered without the ability to visualize and leverage real time data. The company therefore needed a solution that would not only improve business agility, but also ensure that data is accurate and consistent. Evaluation of leading database platforms for a scalable solution that could support its business growth needs began in Jan 2012.Very soon the big names viz. Oracle, IBM, and Microsoft featured the list. After an extensive review of various options, the company decided to upgrade its databases to Microsoft SQL Server 2012. 1015 key processes were run on training servers and cut-over was implemented on a Sunday despite few problems with full-fledged support from Microsoft. For MCL, the SQL Server 2012 AlwaysOn feature was of particular interest, both for its high availability and disaster recovery capabilities. Using this feature, the ERP data is kept in sync with the disaster recovery server, which provides live back up. Additionally, MCL was also interested in the data compression feature of SQL Server 2012. This new feature dramatically sped up database query processing time breaking the deadlocks. MCL has a single version of SQL Server 2012 for all business operations. The softwares versatile analysis and reporting options are used throughout the operational process from inventory analysis to business decisions. Manifold benefits were reaped out of this investment: Excellent analysis and real time reporting capabilities offered by SQL Server 2012 helped the logistics department to create an accurate dispatch plan in line with the production capacity. By using SQL Server 2012 AlwaysOn feature, the company has significantly reduced the downtime of its critical databases related to scheduled maintenance and unscheduled failures. This is exactly in line with the online reporting needs where overall availability of databases and applications is pegged at 99.99%. Instead of sending cements to all warehouses, only selected ones with available capacity were chosen with the help of online reports and a detailed dispatch plan at hand. Earlier, non-clearance of trucks at warehouses due to lack of storage facilities would incur huge halting/demurrage costs. Ease of report generation. Reporting is significantly faster and it takes employees 50 percent less time to render reports. Overall, it increased the speed of decision making. Streamlined database infrastructure and significantly reduced data management time. With SQL Server 2012, many maintenance tasks are now automated, which increased staff efficiency and productivity.

15
SDMIMD, Mysore

ERP Implementation at Madras Cements

9. Conclusion
Manual spread sheets received by the corporate office hampered the managements ability to react to the key cost components affecting the cement business prior to the ERP implementation. But focus on process management changes and the senior management ownership of the second ERP implementation made the project a success. It drove companys IT abilities and enabled it to share information real-time across the company. This transparency of information brought about numerous cost savings opportunities, such as warehouse reduction and transportation optimization. The top management was really pleased about the progress made by the company since its first failed attempt in 90. Closing the books at the end of a quarter could now be completed in real-time proved to be direct benefit of the IT enabled business transformation that it championed over the years. But, whether they can expand to other Indian location, diversify into ready-made cement, or perhaps introduce JIT (just-in-time) process for delivery is yet to be assessed.

Bibliography
1. Babu, B. K. (2012, Jan 08). Slideshare. Retrieved from http://www.slideshare.net: http://www.slideshare.net/BibinKBabu/organizational-study-madras-cements-ltd2011 2. Financial Express. (2004, Aug 02). Retrieved from http://computer.financialexpress.com: http://computer.financialexpress.com/20040802/ebusiness01.shtml 3. Google. (2013). Ramco. Retrieved from http://www.ramco.com: http://www.ramco.com/downloads/CS-Madras_Cements.pdf 4. Microsoft Case Studies. (2013, June 26). Retrieved from http://www.microsoft.com: http://www.microsoft.com/casestudies/Microsoft-SQL-Server-2012/Madras-CementsLtd/Cement-Manufacturer-Gains-High-Availability-Improves-Business-Performancewith-Real-Time-Reports/710000002871 5. Ramco. (2013, Jan 31). Retrieved from http://www.ramco.com: http://www.ramco.com/newsroom/press/cpJan-312013.aspx 6. Ramco. (2013, May 03). Retrieved from http://www.ramco.com: http://www.ramco.com/newsroom/news/madras-cements-uses-ramco-erp-on-cloudwith-google-maps-to-gain-market-share/index.aspx 7. Slideshare. (2012, Dec 04). Retrieved from http://www.slideshare.net: http://www.slideshare.net/uplakshgupta/ramco-15487219 8. William Davidson Institute. (2011, May 09). Michigan Ross School of Business. Retrieved from http://www.globalens.com: http://www.globalens.com/DocFiles/PDF/cases/inspection/GL1428925I.pdf

16
SDMIMD, Mysore

You might also like