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FMCG companies adopt enterprise applications
FMCG firms have tight supply chain schedules and face intense
competition when they bring new products to the marketplace. ABHINAV SINGH says
that these companies are now using enterprise solutions to gain visibility into
their schedules, customer requirements and inventories
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K G MOHAN says that consolidation of information led
to operational excellence at HLL’s manufacturing plants |
NAME any Fast Moving Consumer Goods (FMCG) company and you will find that it
uses some form of enterprise application software. ITC, Godrej, Hindustan Lever
and Jyothy Laboratories are some of these FMCGs that have deployed enterprise
solutions. The benefits? They have experienced better utilisation of resources,
faster time to market, and have been able to formulate effective marketing strategies.
Says V V R Babu, chief information officer, ITC group, “Implementing IT
solutions has led to an increase in service levels with our dealers through
redressal of potential stock-out scenarios. This has been made possible due
to better visibility of sales, inventory and production-in-progress data.”
There are two key drivers for implementing enterprise applications—to consolidate
data, and to understand the market and customer demand.
Consolidating data
Many FMCG companies had been grappling with the need to consolidate their information
base accumulated from different sources. These companies have operations spread
across India. In order to bring efficiency to their processes, they needed to
have online information about their manufacturing plants, distribution points,
distributors and retailers. Says Mani Mulki, general manager, Information Systems,
Godrej, “Consolidation of information is essential for any FMCG company
as it helps monitor the company’s efficiency levels, inventory movements
and brings greater visibility across its supply chain. It also helps in planning
and forecasting future requirements more efficiently.”
The consolidation of information has enhanced the productivity
of Hindustan Lever’s manufacturing plants. Explains K G Mohan, vice president,
Information Technology, HLL, “Consolidation of information has led to operational
excellence at our manufacturing plants across the country. Since finance, planning
and inventory are all integrated, we can focus on our core business—production.”
Understanding competition
The consolidation of enterprise-wide information has led to better market analysis
for FMCG companies. There has been a continuous increase in the level of competition
in the market, and the software has helped them understand customer preferences.
Mohan says, “Enterprise applications have helped us improve our intimacy
with customers as we are able to analyse consumer behaviour and understand our
brand’s performance in the market. This has helped us innovate with our
products as per customer preferences.” Many of the companies are using
business intelligence (BI) tools for better market analysis. For instance, HLL
is using the Oracle data warehouse solution and Oracle Analyser. Godrej Consumer
Products is also using Oracle’s data warehousing solution to measure the
effectiveness of its product campaigns.
Technology roadmap
Technology will be a major focus area for FMCGs in the near future. Babu of
ITC says, “Web-enabling all our applications will be a major activity for
us in the next one year. This will ensure application access for ITC’s
managers at any time from any location in a secure manner.” HLL is also
thinking along similar lines.
Other areas of focus for FMCGs will be chalking out plans
for Disaster Recovery (DR) and Business Continuity (BC). ITC will be creating
two new data centres with centralised storage (Storage Area Network), and complete
DR mechanisms accessed through a virtual private network connecting 280-plus
locations across the country. HLL is in the process of defining its BC and DR
strategy.
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According to B V DINESH, a lot of investment
would have been required to procure a standardised solution, and then customise
it to meet Jyothy’s requirements |
Meanwhile, Godrej is evaluating a pilot of Personal Digital
Assistants (PDAs) to capture information from retailers and then incorporate
the same into its supply chain system. Says Mulki, “We are expecting that
data capture by our sales staff members through their PDAs will result in a
20-25 percent increase in their productivity.”
Enhancing information delivery capabilities using front-end reporting tools
for better market and self analysis will also be a thrust area for FMCGs. HLL
already has plans to integrate different IT processes using middleware technologies.
| JYOTHY is one of the leading FMCG companies
in India, with popular brands such as Jeeva Ayurvedic soap, Ujala Supreme
whitener, and Maxo mosquito coils. Jyothy went ahead with an ERP solution
which it developed in-house, and is reaping the benefits now. The company
has eleven manufacturing plants, and stock depots across 60 locations in
the country. Prior to the implementation of the in-house ERP system, all
major processes were manual, and there was no consolidation of information.
B V Dinesh, IT consultant for Jyothy, explains, “As there was no information
consolidation it was very challenging for the company to gauge its own perormance.
It was also not possible to have an efficient flow of information across
the organisation; this resulted in lack of transparency.”
Jyothy chose to go with an in-house solution rather
than procure one from a third party vendor. Dinesh said that a lot of
investment would be required to procure a standardised solution and then
customise it to meet Jyothy’s requirements. Moreover, the continuous
upgrades which would be required would be easy for the in-house team to
provide since the solution was developed by them.
Implementation work started in April 2002, and
was completed by December that year. The basic aim of the implementation
was to centralise operations and make them accessible online to the entire
organisation. After the implementation, the decision-making process has
improved as data is visible across the company. The procurement and inventory
process have been centralised. This has ruled out any excess stocking
of material. The implementation has also resulted in efficient production
planning and communication throughout the organisation. It is now easy
for the company to analyse the performance of its sales staff, thereby
leading to enhanced productivity. Jyothy is presently planning to add
HR, payroll, media management and logistics modules to its ERP system.
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| FMCG |
Solution |
Benefits |
| ITC |
SAP in FMCG, Oracle Applications in agri-businesses
and Optivision in paper boards. Homegrown Web-based applications for managing
supply chain and customer relationship processes. |
Forecasting of cash flow. Accounts closure takes
place 50 percent faster than before. Reduction in potential stock-out scenarios.
Visibility of inventory across locations thereby reducing the load on the
system. |
| Hindustan Lever |
MFG/PRO for the transaction system, Supply Chain
Planning layer from Adexa, Oracle Datawarehouse solution and Oracle Analyser
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Enterprise solutions have helped Lever enhance
its supply chain system, check stock inventory online, and gain a deeper
understanding of customer requirements.
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| Godrej Consumer Products |
MFG/PRO ERP system |
Has eased the process of capturing market data. There
is more visibility throughout the organisation. It has also helped formulate
market strategies by providing better understanding of market conditions. |
| Jyothy Laboratories |
Home-grown ERP system |
Improved the decision-making process. Led to better
inventory management which has resulted in proper production planning. It
also improved the channels of communication throughout the organisation. |
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Source: FMCG companies |
abhinav@expresscomputeronline.com
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