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Madura Garments changes the way it works

Deploying mySAP AFS has helped the company improve its order fulfillment, trim inventory, and bring down lead time to market, says Abhinav Singh

Madura Garments faced a problem. A bunch of home-grown applications created using diverse platforms such as COBOL, Ingres and FoxPro had created islands of information that were scattered willy-nilly across different departments.

The solution was to be a pioneer in implementing an inventory-specific Enterprise Resource Planning (ERP) product called Apparel and Footwear Solution (AFS).

Isolated islands

Earlier, the company’s business processes were handled by the aforementioned home-grown applications. The natural fallout of this was that islands of information attached to these legacy applications such as the warehouse application written in COBOL made it impossible to get any kind of meaningful information in real time. There were factory applications too (fabric inwards, quality inspection, goods receipt note, etc) that were used for everything from capturing production data to tracking finished products; these were written in FoxPro. It took more than five days to compile an MIS report for the management.

The legacy system had other drawbacks. Up-to-date information was unavailable due to non-integrated systems, and modifying existing systems to address new information needs related to product development was a daunting task. The presence of multiple technologies was making integration and modification of its IT set-up cumbersome, and the company was incurring considerable expense in maintaining its IT infrastructure.

Limited shelf life

After each milestone we did a quality audit to avoid cost overruns. The audit was conducted by a representative from SAP Germany N P Singh Vice-president, IT Madura Garments

Generally, an item of clothing has to sell within three months of its manufacturing date. The reason is that after this period a new design will hit the market. Fashion cycles are short, hence a garment company needs to reduce the time taken by the process from design to finished product. This encompasses studying design trends, preparing a blueprint of the design in consultation with agents and key customers, freezing a design, and sending it to the desk looming mills (a place where a ‘fabric swatch’ is prepared based on the CAD design) for production. The entire process takes 10-11 months. Explains N P Singh, the company’s vice-president for information technology, “As the legacy applications were unable to provide real-time data, our order execution rate was 75 percent, and the lead time from Work Order (WO) to Finished Goods (FG) was 22 days.”

Finding the best fit

Madura revamped its IT infrastructure to match its business objectives and growth. Explains Singh, “We wanted to move from a heterogeneous to a homogeneous environment.” A detailed exercise was conducted to assess the needs of internal customers and the organisation’s business strategy for the next decade, which was then aligned with the company’s technology (solutions) deployment strategy. Towards this end, as the first step, an integrated company-wide information system was envisaged.

The functional scope of the project included planning and demand management, procurement and inbound logistics, production and shop floor execution, sales and outbound logistics, and finance and cost management. 35 vendors who had a textile and apparel solution were identified, including SAP, Oracle and Accenture. SAP R/3 AFS was selected after a thorough evaluation of the functional fit of the product to Madura’s requirements.

Singh says, “SAP came very close as it required less customisation. We decided to take a big-bang approach and chose it for deployment.”

A quality audit after each milestone

Madura formed a project team comprising consultants from PricewaterhouseCoopers. Apart from this, a joint team was formed with SAP India. A 30-member core team of 15 consultants and an equal number of professionals from Madura was formed to oversee the implementation. In order to ensure that the deliverables materialised, Madura insisted on having continuous auditing of each milestone achieved during the entire implementation.

Singh recalls, “After each milestone we did a quality audit to avoid cost overruns. The audit was conducted by a representative from SAP Germany.” The implementation kicked off in August 2001, and it went live in July 2002. The modules that were implemented included production planning, materials management, sales and distribution, finance and control. In 2004 Madura added more modules—the advance planning and optimisation (APO) tool and business information warehouse (BIW). APO was added to increase the accuracy of forecasting, and BIW to capture secondary and tertiary sales data so that the management was in a position to drill down for information from retailers to customers.

Measurable benefits

The SAP implementation has changed the way work is undertaken at Madura. Information is now available on a real-time basis, and the islands of information have been done away with. The implementation has also helped decentralise responsibilities to the place of origin. In the process, the company has reduced its response time to both internal and external customers. Singh details some benefits: “Order execution has increased from 75 percent to 92 percent, and lead-time from WO to FG has reduced from 22 days to 14. Similarly, dormancy (six-month-old-stock) has been cut from 4.23 percent to 3.65 percent, which means wastage has reduced.” This indicates the return on investment. APO has helped Madura increase its accuracy to 70 percent, and the company’s aim is to touch 80 percent. Similarly, with the help of BIW, it will be able to tap secondary and tertiary sales data to capture design, styling and colour trends.

Post-implementation, senior executives at Madura can now monitor variations between its annual budgetary plan and their monthly plans. In this manner, co-ordinated monitoring of top- and bottom-line growth takes place, which results in improved profitability. The implementation has also brought an integrated order management, revenue recognition and account receivables functionality, and at the same time has eliminated non-value-adding functions such as reconciliation and consolidation.

“Profitability assessment for each showroom, brand and customer can be done in the system,” says Singh. It can also suggest replenishment based on alternatives and categorisation, and can generate weekly reports on the sales and inventory for each showroom. Moreover, sales returns can be linked to original sales orders.

Today, there is efficient co-ordination between demand, supply and production in the company. The new system facilitates data warehousing for analysis of consumer trends, design performance and competitor moves. The goal of making information available company-wide by passing on critical MIS data to knowledge workers and decision-makers has also been achieved. Besides, order fulfillment rates have increased, while stocks have been reduced to a minimum.

abhinav@expresscomputeronline.com