Why IT initiatives

y to take the battle to its competitors y with an entry into the FMCG sector and believes IT to be an

indispensable weapon in this war y The distribution network is the lifeline for an FMCG company and is a greater value add in terms of IT returns than manufacturing

y For years, Dabur had been using Fox Pro based systems for y

handling logistics. By 2000,the companys distribution network had grown, spanning 29 factories, 6 mother warehouses, 47 stocking points, 4 zonal offices and over 10,000 stockists and dealers. In addition, about one hundred trucks were dispatched daily. With distribution pressures rising, technology upgradation was necessary. The company therefore initiated automation of its outward logistics system in April 2001 with its primary distribution system. Named Project Synergy, this involved implementation of the MFG/PRO ERP system

Why MFG/PRO
y Dabur works on two ERP systems. y For the outbound logistics it runs QAD ERP suite known as MFG/PRO. For

manufacturing locations, there's BaaN

y BaaN requires a central server. To fit so many locations many of them situated

in small and remote areas into a central processing system, Dabur needed a VSAT (Very Small Aperture Terminal) network.
y As with most companies, sales at Dabur peak towards the last 4-5 days of the

month.
y If the company were to depend on this kind of a central server architecture,

which would be connected through VSATs, the network would be enormously overburdened during every month-end.
y However, the company never wanted to make the network a critical component

in the automation of outbound logistics.

y The company decided to go for an ERP solution that was 'network

independent'.
y It found that MFG/PRO could be run on independent servers at each location it

was a good choice that suited its unique needs.

Implementation
 Once it was decided that MFG/PRO it will be to handle outbound

 

logistics, a core implementation team which comprised end users from departments, like distribution and planning, finance, sales and IT was set up. The deployment was made in four stages. The first included a requirement study where a model was developed. Dabur has five SBUs (Strategic Business Units), each with diverse needs in terms of the outbound logistics. Since it is a traditional FMCG company into family and healthcare products, pharmaceutical products, food products, which is a perishable products division,ayurvedic products for both the medicine and home segments. All these divisions have diverse requirements. The core team had its job cut out: It had to develop a common business model, which could cater to every segment at the same time..

Advantages of implementing
y Improvement in sales dispatches to the CFA. The sales earlier were

heavily loaded towards the last week of the month with over 80 percent of sales taking place during this time. This led to a number of problems such as sales returns and cheque bouncing from pushed sales to meet sales targets. y Improvement in collections. Collections have recorded an improvement of about 6 days and are more evenly spread over the month. This leads to considerable saving on working capital locked up in out-bound logistics. y Reduction in sales returns and unsold stock inventory. Stocks in CFAs are visible to central distribution planners in saleable and un-saleable categories leading to better management and distribution. y Central management of sales schemes. The schemes and free issues are now managed centrally at the corporate office and the ERP system keeps a strong check on schemes leading to reduction in misuse of schemes in the field.

Mfg Pro and BaaN

y Use of Mfg Pro gives real-time information about the inventory and y

y y y

sales situation of distributors and improves the accuracy of demand forecasts. These demand forecasts are then fed into the back-end system (Baan) for materials planning and production scheduling. Integration of the two systems is expected to significantly enhance their efficiency in 2003-04. Mfg Pro is fully operational in the zonal offices, motherwarehouses and CFAs and Baan is already live in five manufacturing locations. A Secondary Sales System is also being implemented to provide countrywide information on Secondary pipelines and sales by brand. This new Secondary Sales System, by making focus on secondary sales possible, has played an important role in tracking brand-wise sales, and reducing pipeline inventories.

y The improvement in area-wise and brand-wise inventory

management has scaled up the entire supply chain management through better sales forecasts, production scheduling, materials planning, vendor management and raw material sourcing. y Company has implemented yet another new intiative of Claims Settlement using an Intranet/ Extranet based system, for systematic tracking and settlement of claims. y the Company also implemented another major initiativeEmployee Management System (EMS), an intranet based HR-information system, including Payroll and PF processing.

By 2005 Dabur started to feel the pinch of maintaining two independent ERP systems. They were facing following issues:
y There were still data redundancies and inconsistencies at

times.

y Considerable amount of rework was necessary in just data

format conversion between the two systems.

y It still did not provide a holistic picture and thus posed

problems in formulating a strategy or taking business critical decisions.

y Maintenance costs climbed up because of the

above stated points.

y Therefore, to realize not just the operational

excellence but also decision support infrastructure, the idea of a single organization wide ERP implementation was proposed in Dabur. So, With Accenture s help, Dabur implemented strategic and operational changes by implementation of organization wide SAP core modules.

Major IT initiatives
y Migrated from standalone ERP systems - Baan and Mfg to

y y y

centralized SAP ERP system from 1st April, 2006 for all business units (BUs). Implemented a country wide new WAN infrastructure for running centralized ERP system. Setting up of new data center at KCO head office in Ghaziabad. Extension of Reach system to distributors for capturing Secondary Sales Data to collect near real-time pipeline information was done by 2004. Roll out of IT services to new plants.

Accenture-drivers of high performance

y Competing on core competencies, while outsourcing non-core y y y o o

functions to trusted third-party providers. Viewing information technology (IT) as a strategic asset that creates real valuenot simply a cost to be managed. Streamlining processes wherever possible From an IT perspective, Accenture recommended a two- pronged strategy: migration to a nimbler outsourcing model that would generate value through agility and support business initiatives and maintenance of its SAP enterprise resource planning (ERP) system.

y Implementing a new sales and distribution strategy. o to identify key customer segments in urban and rural

markets, customize sales programs for key accounts and reorganize Daburs sales teams by one of four trade channels (modern trade, rural,mom-and-pop and drugstores). o The Accenture and Dabur team optimized the companys internal logistics and distribution processes for mega retail customers, and put metrics and incentives in place to drive specific goals

y Developing a new supply chain management capability o focused on bringing a market-driven perspective to the new

supply chain and building collaboration skills o Accenture helped Dabur create capabilities to facilitate the launch of new initiatives, products and trade promotions o instituted a plan to leverage SAP by automating Daburs material resource planning processes across the complex manufacturing arena o The new approach allowed employees to shift their focus from simple transactions to more strategic procurement efforts such as cost management.

y Optimizing Daburs ERP capabilities o While Dabur had deployed a SAP ERP system to link its

corporate headquarters, 12 manufacturing plants and more than 30 distribution centers, the company was not using the system to its maximum potential. Accenture launched a three-phase ERP improvement program that involved: o Correcting the transactional and management information systems. o Conducting change management and synchronizing Daburs business processes with realities in an ERP context. o Developing value realization projects.

y Leveraging IT for business initiatives o Accenture designed a Web-based demand planning and trade

promotion forecasting tool, and installed point-of-sale software at select retail and wholesale sites o This latter initiative allowed Dabur to integrate key customers into its IT network and gather real-time market information that would drive better sales and distribution decisions y Outsourcing IT operations o Accenture delivered industrialized and cost-effective skills that would allow Dabur to remain at the leading edge of IT delivery. Plus, Dabur gained the flexibility of being able to focus on its core capabilities while realizing increased value and lower costs through improved performance.

Future Challenges
y Forward integration of SAP with distributors and stockists. y Backward integration of SAP with suppliers. y Implementation of new Point of Sale (POS) system at stockist point

and integration with SAP ERP.

y Implementation of SAP HR and payroll. y SAP roll out to Dabur Nepal Pvt. Ltd. (DNPL) and other businesses.