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Wockhardt meets growth requirements

Wockhardt Limited has been able to meet its additional growth requirements by implementing SAP ECC 5.00. Now there is better integration of information, planning and inventory control across business processes says Abhinav Singh

For a pharmaceutical major having extensive operations across different locations in the world besides India, the implementation of SAP ECC 5.00 has made all the difference. SAP ECC 5.00 has not only met its growth requirements but has also helped it achieve added productivity across its operations be it at different branch offices or the company’s manufacturing plants (The company has manufacturing plants in India, USA, UK, Ireland and France and more than 65% of its revenue comes from the US and European markets.)

Shortcomings in the legacy system

Wockhardt, which was running an ERP system from Avalon, was facing a number of issues with it. Suresh Shenoy, Senior Vice President –IT, Wockhardt Limited explains, “Avalon was not meeting our added growth requirements and had lived out its life. It was not meeting the reporting requirement and also required a lot of customization. Added growth meant exposure to multiple currencies, locations and languages and Avalon just could not handle the change. Moreover consolidation of data across locations was difficult and there was also duplication of work and reconciliation would happen at every stage. There was also the lack of a structured information system which led to delayed decision making, and consequently was having a negative impact on the business.”

Changes were not being carried out effectively and the legacy system could not adhere to the regulations related to the pharmaceutical industry. Moreover there was no integration across business processes. Account closures after every quarter were delayed as many things had to be compiled on Excel sheets and there were inaccuracies in accounting as there was a lot of manual work involved. The company looked for integration across business functions, faster information availability, and better control of operations, which were not been met by Avalon.

Zeroing in on SAP

The company decided to carry out a thorough evaluation before closing in on SAP ECC 5.00. Packages from Oracle, Microsoft and JD Edwards were evaluated besides SAP. A careful study of the product demonstrations by the SAP team and a thorough evaluation of the SAP implementation project at Lupin (another pharmaceutical major) led to Wockhardt finalizing on SAP. Shenoy, said, “With Wockhardt going global, the need of the hour was a robust IT infrastructure and an efficient information system in place and we found that SAP was suitable not only to meet our requirements with regard to the pharmaceutical industry but would also be helpful in consolidating our operations across multiple countries and currencies. We also found that the package would cater to global business requirements, while handling country-specific requirements and introduce best practices of the Life Science industry at all locations.” Wockhardt also found that the SAP ECC 5.00 package would offer a single technology platform and business data analysis capability and provide a high level of security with role and authorization control.

The implementation

The SAP implementation was completed in a matter of eight months from May 2005 to January 2006 when all the modules went live. IBM India was chosen as the implementation partner for the project as it had the requisite experience in the pharmaceutical domain. The major challenge was to gather a lot of functional people during the implementation and these were from different departments like the finance, production and planning department. During the implementation there was a strong in-house team comprising of 50 plus people and the IBM team, which was close to 22 people. Modules such as Materials Management, Production Planning, Quality Management, Plant Maintenance, Sales & Distribution, Customer Service, Human Resources Financials & Controlling and Product Life Cycle Management were implemented with a big bang approach and all of them went live together in January 2006 across locations. Now the solution has also been extended across foreign locations such as the US, UK and Ireland. Now the SAP extension work is going on in France and expected to be completed by January 2009.

Making a difference

Prior to the SAP implementation Wockhardt’s business processes were not integrated and data lacked consistency and accuracy, which led to ineffective decision-making, lack of flexibility and inefficient use of resources. This resulted in higher incidence of data entry errors, higher costs of error processing and paperwork. Moreover there was late closure of accounts after every quarter. The legacy system was unable to meet the growth requirements. However, the SAP implementation has brought in a unified data platform and standardized business processes have eliminated data entry errors and saved valuable administrative time. Since the SAP system works in real time the staff at Wockhardt can update, retrieve and manage data in real-time, which enables them to execute their tasks more efficiently. While enhancing overall efficiency across the organization, the centralized system ensures that information across the business is available to the management, not just as raw data, but also in the form of detailed reports. Reports can be quickly produced and without logistical headaches. Moreover, access to accurate information enables the company to evaluate options and make well-informed decisions, on a timely basis.

Better stock taking and inventory control

The most striking benefit has been complete visibility leading to better planning and improved coordination across the organization. Post SAP implementation the company enjoys full visibility into its stocks across all sites. The result has been an optimized inventory throughout the supply chain and improved replenishment planning; with better fill rates and fewer stock outs. A clear picture of the inventory leads to improved inventory management, while reducing dependency on employees to provide data as and when required. Further, the system takes care of the processing of purchase orders while reducing the scope for errors and eliminating data redundancies, leading to significant time savings. With the ERP solution in place an up-to-date, centralized view of purchasing activities is available and enables the company to make effective management decisions.

The SAP implementation has resulted in better Reduced Credit Returns as it gives a centralized view which enables the company to take care of products which are near expiry dates leading to a reduction in the number of goods which were being returned. There are now better purchasing rates, as earlier in each of its manufacturing plant in India purchasing activities was not been done in coordination with other plants. Now excess material can be transferred from one plant to another and now the company is in a position to negotiate with vendors and enjoys the advantages of making bulk purchases.

Shenoy explained, “With SAP, all business processes are integrated leading to centralized planning, procurement and payments. The company’s sales depots are connected for transactions and reports, which gives them online visibility of sales and stocks. There is now access to more accurate facts and figures in real time and the rich reporting and analysis functionality enables management to identify opportunities and risks that they may not have otherwise spotted; resulting in increased efficiency. With virtually every business unit utilizing the solution, information flow and communication have improved dramatically, while enhancing corporate decision making.”

Better integration of overseas operations

The SAP ECC 5.00 has given the company management an effective tool for the direction and control of its country subsidiaries post its acquisition of some companies in Europe and the US. The ERP has enabled fast and smooth integration of newly acquired companies and it is also taking care of consolidation of different currencies as well as legal reporting requirements.

Additional capabilities

The SAP system has led to the integration of heterogeneous systems like EDI (Electronic Data Interchange) and BlackBerry with the SAP software. Through EDI, customer orders and invoices are integrated. Orders are extracted from the BlackBerry server and generated in SAP. The SAP NetWeaver Portal, which was also implemented along with the ERP system, gives managers fast, user-friendly access to high-quality, consolidated information for tactical and strategic decision-making. The portal facilitates simple, secure and personalized access to information for employees and business partners. Consequently, communication among individual departments works better, while opening up new options for cross-site collaboration. Access to the portal helps vendors plan their manufacturing and production activities according to the company’s requirements. SAP ECC 5.00 helps the company compete more effectively by giving it increased flexibility to respond quicker to market opportunities, provide value-added services to its customers, and change course when necessary.

The road ahead

Wockhardt’s future plans regarding the SAP system include the implementation of the CRM, SCM, Advanced Planning & Optimization component, Payroll module, NetWeaver Exchange Infrastructure (XI) and NetWeaver components for integration.

abhinav.singh@expressindia.com