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Not
content with establishing a name for itself in the Indian
psyche with its Ayurvedic products, Dabur India now plans
take the battle to the FMCG sector and is chanting IT as its
battle cry. Shipra Arora takes a look at the company’s
IT infrastructure and how it is gearing itself to face this
new challenge
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SHUKLA
says IT is the fourth asset of the company after
a strong brand image, product development strengths and
distribution system |
Dabur
India has established for itself a place of pride in the Indian
psyche, and it is not without good reason. When one thinks
of the years of experience of selling in the Indian market
and the fact that it has managed to stand up to the challenges
thrown at it from time to time by small fledglings and even
the bigger MNCs, the fact that it is one of India’s most
widely recognised company does not come as a surprise. However,
not content with just fighting off incumbents, the company
now plans to take the battle to its competitors with an entry
into the FMCG sector and believes IT to be an indispensable
weapon in this war. Says Gopal Shukla, chief information officer,
Dabur, “Most industries use IT in certain distinct phases
before evolving into a complete e-business enabled organisation.
We are currently in one of those phases and believe it to
be the fourth major asset of the company (other three being
strong brand image, new product development strengths and
an extensive distribution network).”
In an effort to establish itself as a strong player in the
FMCG sector, Dabur has already started implementing IT systems
and processes all across the company. Says Shukla, “The
distribution network is the lifeline for an FMCG company and
is a greater value add in terms of IT returns than manufacturing.
In line with this, we have outlined our IT focus on streamlining
complete outward logistics of the company in the true spirit
of an FMCG.” With IT assisting in the very build-up of
its new image, it surely is an exciting time for IT at Dabur.
According to Shukla, the IT department of the company will
have important role to play in its IT initiatives. From its
early beginnings, the implementation of simple COBOL and Foxpro
based applications to the implementation of the manufacturing
ERP system, intranet and extranet based applications and establishment
of a robust communication and networking system, the team
has played an active role in ensuring that the IT infrastructure
lives up to expectations and perform its task.
Project Synergy: Primary Distribution System
For years, Dabur had been using Fox Pro based systems for
handling logistics. However, today the company’s distribution
network has 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 are dispatched
daily. “With distribution pressures rising, technology
upgradation was necessary,” explains Shukla. 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. The system is currently running
in over a dozen Carrying and Forwarding Agents (CFAs) and
mother warehouses. Shukla adds that over 90 sites in the Primary
Distribution will be completed by mid-2002.
He adds that significant benefits are already visible in locations
where the system has been implemented. These include:
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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.
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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.
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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.
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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.
As the project nears completion, the company envisages more
business benefits and distribution planning shifts completely
on to the ERP system. “With the new primary distribution
system in place, the two main benefits that are going to accrue
will include reduction in finished goods inventories in the
supply chain and reduction in working capital. The savings
in these two areas alone will more than pay for the entire
costs of project implementation,” explains Shukla.
Secondary Sales System
Once the primary distribution system is through with the implementation
process, the next thing on the company’s agenda is the
streamlining of its secondary sales system. Though it does
not follow and is not concerned with the sales at the secondary
level, Dabur felt the need to capture this layer to be able
to perform more effective sales planning and forecasting.
According to Shukla, secondary sales need to be monitored
continuously to forecast sales in each monthly planning cycle.
Dabur has distinct requirements for secondary sales monitoring
in each of its SBUs. While the FMCG and Healthcare Products,
making up over 50 percent of sales in Dabur need to monitor
only the Pipeline and average sales by leading brands in each
region, the Foods division needs to know stock ageing in the
trade. The Pharma division needs to look at sales force productivity
as this directly translates to sales. Unlike other divisions,
sales depend on the five minutes that a medical representative
spends with a doctor. According to Shukla, the secondary sales
system will be designed to cater to the monitoring requirements
of each of these SBUs.
The secondary sales system will also provide for sales force
automation system through PDAs that can plug-in to a central
system through the Web. While in th field, the sales staff
can pull information such as doctor’s history, past freebies
given, sales achieved, pending queries etc over the Web. Day-end
summaries of sales achieved by each sales person can also
be tracked countrywide. Along with forecasting, MIS from the
secondary sales system will assist in designing of sales promotion
schemes, especially in the Ayurvedic products division where
number of SBUs is very large compared to the sales it generates.
As of today, Dabur uses both automated and paper based information
collection systems that will be integrated in the Primary
System after it is completely rolled out by mid-2002. Dealers
and stockists in the Foods division use point-of-Sale software,
the information from which is used to implement a replenishment-based
model for Secondary stock control.
The company plans to implement an integrated secondary system
by 2002-03 that will cover the needs of all divisions in a
single business model and will also integrate with the MFG/PRO
primary distribution system. This system, adds Shukla, will
facilitate order placement through the Internet and also provide
shipment details and payment related information to dealers
and stockists.
Another area, which the company is focusing its energies on
is creation of an intelligent MIS system in the manufacturing,
sales, distribution and HR space, all geared towards more
efficient decision-making. According to Shukla, the sales
and distribution MIS will sit on top of the applications and
extract relevant information using data warehousing techniques.
Similar systems will be set up for other applications too.
ERP in manufacturing
Automation of the manufacturing process at Dabur commenced
with the implementation of Baan’s ERP system in 1999.
This was the first ERP system implemented by the company in
two of the largest plants at Sahibabad and Baadi. Alpha Unix
servers at the corporate office are used for Baan and over
200 concurrent users login from both plants using fibre and
PAMA VSATs in the remote Baddi plant. Elaborating on the Baan
ERP system, Shukla explains that some of the key modules of
the system include manufacturing, finance, intelligent resource
planning, master production planning, costing and dealer planning.
As the inventory moves through the plant, various modules
are synchronised to keep track of its movement. The primary
distribution plan becomes a vital element of the manufacturing
system. The planning process includes one month’s fixed
Rolling Production Plan (RPP) and two month’s rolling
plan, based on a Rolling Sales Forecast (RSF). According to
Shukla, the implementation of the manufacturing system has
been very challenging considering that raw materials for Dabur’s
products are largely sourced from the unorganised sector where
herbs and fruits are procured. Added to this was the challenge
of extensive customisation to meet stringent FDA regulations
in the QC in Pharma product lines. The system also includes
a finance module running at the corporate office.
The rest of the smaller manufacturing plants are run on home-grown
solutions, mostly developed in-house. As part of its future
IT plans, these plants will be migrated to the ERP platform
after the automation of the outbound logistics system.
Intranet and extranet based applications
According to Shukla, almost all applications in IT extensively
use the Intranet called Daburnet and Extranet platform to
extend the reach users countrywide. “These applications
are likely to grow extensively in the future as online information
and workflow applications form a very critical part of Dabur’s
e-strategy. This will lead to major improvements in the workflow
processes within the organisation,” he explains.
If the application platform is not designed to use the Intranet
platform in its native form, then Citrix and Tarantella are
used to extend the reach through the Internet using a browser
based front-end. A case in point being the primary and secondary
systems’ MIS reports on MFG/PRO systems. However, a number
of applications are written using Microsoft’s Interdev
platform, which enables the use of Intranet natively. Some
of these applications include multi-location employee management
system, helpdesk for IT, document storage and retrireview
system, Vaidya monitoring system and card-based attendance
systems.
Connectivity
In an effort to support the applications and systems that
have been and will be put in place, the company is in the
process of building a robust back-end infrastructure. Shukla
points out that in the coming year, investments in building
the network are likely to increase as this will be a growth
area considering the extensive rollouts both in the primary
and secondary distribution areas.
The company boasts of a hybrid Wide Area Network (WAN) comprising
of PAMA VSAT links from HECL connecting its corporate office
to its factories and Zonal offices. The UNIX and NT servers
running Baan and MFG/PRO ERP systems, Intranet servers and
MS-Exchange servers located at the corporate office form the
centre of the network. VPNs and line-of-sight links connect
to locations where VSATs are not deployable and locations
requiring high bandwidth. KU Band VSATs are used to reach
locations in the Primary distribution where VPNs are not feasible.
Bandwidth for Internet usage is provided by three ISPs a 2MB
link through VSNL, a 256K link from MantraOnline and a 2Mb
link for VPNs from Satyam. Shukla adds that the next logical
step, after enhancing capacities, will be cost saving. For
this, the company is installing a dedicated multi-mode fibre
from a local exchange to replace voice calls on over 200 copper
pairs coming from the exchange. This fibre will also carry
E1 lines for data in the future, providing robust last mile
links to Dabur’s network centre. Future infrastructure
plans include facilities for video and audio conferencing
to sales offices. This will lead to significant reduction
in STD and ISD expenses.
Shukla adds that at the end of day, success of all these IT
implementations is dependent largely on how well they are
adopted within the organisation. Process owners lead almost
all large project implementations from the end-user departments.
This helps in giving each project a ‘non-IT’ flavour
and increase acceptability amongst the end-users in the organisation.
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