Peer-to-Peer

Efficiency with ERP

mySAP ERP is helping Associated Capsules grow faster by trimming its inventories and wastage, says Abhinav Singh

Implementing an ERP solution has transformed Associated Capsules from a disparate, manually-driven organisation to an integrated and efficient entity. Project Spandan, the mySAP ERP implementation project, has reshaped the company’s manufacturing processes, improved inter-departmental communication and made production planning more efficient. Due to effective production planning the company has also been able to reduce inventories and wastage. The ERP implementation has been a milestone for this 40-year-old pharmaceutical company, which is growing at the rate of 25 to 30 percent every year.

Too many systems

Associated Capsules has five manufacturing plants situated in Maharashtra servicing about 1,000 customers worldwide. Each plant had a different home-grown application system with no process integration. The information generated from each plant had to be collected manually and later consolidated at the corporate headquarters in Mumbai for generating MIS reports. People were spending lot of time in generating these reports, which could not be generated before the 8th or 10th of each month, hampering decision-making. There were also inaccuracies in report generation as each manufacturing plant had a different ‘codification’ system (codes given to the gelatine capsules) and when it came to integration of information from different plants it was a problem for the report generation team as there was no integration of information.

The finance, store and purchase departments of the company were using Ramco Marshall ERP, whereas production and sales departments were utilising FoxPro. This caused integration problems. Nitin J Parekh, General Manager, Corporate IT, Associated Capsules Group says, “Due to the disparate systems there was disintegration of information and it used to take days responding to customer queries. This resulted in duplication of work, (such as data entry) and reconciliation of this data was cumbersome.” There were certain statutory requirements too (such as meeting the FDA norms) that were not being met by the home-grown disparate systems. FDA norms mandate implementation of an integrated IT solution.

Project Spandan

After facing numerous issues, the company decided to move ahead with a standardised ERP solution. The Project was dubbed Spandan. Parekh points out, “We had the option of developing our in-house systems and then consolidating them. Or add modules to the Ramco Marshall system we were using, or move ahead with a standardised ERP system that met all our requirements in an integrated manner. At the end of the day we decided to go ahead with a standardised ERP package.”

During the evaluation stage various options were weighed and three ERP vendors were short-listed—JD Edwards, SAP and Oracle. The company used a scorecard to rank these vendors and their solutions but after the evaluation, decided to go ahead with SAP. Parekh says, “We zeroed in on SAP because of its strong presence in India, and good service backup and support. We also found that SAP had a strong presence in the pharma sector and had several live sites (pharma companies) using mySAP. The company also shortlisted three implementation partners—Wipro, Siemens and Oak Brook Technologies (OBT) and decided to opt for the latter. “OBT had domain knowledge and experience of working with pharmaceutical and engineering companies. It also had the right maintenance and support infrastructure,” adds Parekh.

Customising ERP

The implementation kicked off in November 2004 and went live on May 1, 2005. Customisation of the mySAP ERP system as per the company’s requirements was a challenge. Parekh explains, “There are unique product codes for different products and the system had to be customised as per their requirements. Additionally linking different plants located at remote locations in Maharashtra was a challenge and the ERP system had to be implemented across the plants.”

The implementation exercise also involved the entry of data from the disparate systems into the new ERP system, which took a lot of time—nearly three months. The modules chosen were Finance, Material Management, Production Planning, Quality Control, Fixed Asset and Plant Maintenance.

Transparency

Ever since the ERP system has gone live it has brought in transparency into the different processes. MIS reports are now generated on a daily basis and the reports are accurate and there is real-time sharing of information across manufacturing plants. Earlier the staff of the company had to put in extra hours to generate reports, which is now eliminated. The inventory has reduced substantially as there has been an improvement in production planning. Customers are also able to access information online and are able to mention specifications required in the product. This information is passed on to the manufacturing plants which in turn incorporate these changes.

Further, the Quality Control module of mySAP ERP has helped the company bring quality assurance to product development as the system enables tracking any deviation.

More benefits are expected from the system which is expected to boost the company’s bottom line as efficient processes bring in better decision-making and faster and accurate manufacturing.

In the pipeline

After the ERP deployment, Associated Capsules is planning to go in for a Business Intelligence solution followed by a CRM solution in the next six months. Parekh says, “We want better analysis of our reports through the BI solution and ensure better interface with our customers through a CRM solution.”