Peer-to-Peer

Managing multiple issues

Recon Oil Industries implemented an ERP solution to deal with issues such as tracking materials, maintaining cost details, and doing away with manual entries. By Renuka Vembu

Recon Oil Industries Limited (ROIL) was facing serious issues with its material supply process, tracking the same at the sub-contractor’s site and managing sales data, due to which delivery against sales orders got delayed, costing the company dearly.

ROIL was using DOS-based systems and Tally for its daily activities. Sikandar Khan, Manager (EDP), Recon Oil Industries, said, “There were variations in the required and supplied material from suppliers, and materials going and coming in from subcontractors. Reconciliation of multiple locations for finance department was a major effort. Marketing schemes were difficult to implement properly, so could not produce desired impact. The production module was not part of the system as basic inventory, and sales and purchase modules were not integrated.”

The company went for an ERP solution named Ebizframe in January 2004. The ERP is Web-hosted through Tata Indicom DSL line. Other sites are connected through local Internet services of cable service providers or dial-ups. At present, there are 10 users at the head office; 16 users in all. The expense incurred for the procurement of ERP software, along with hardware, amounted to around Rs 16-17 lakh.

The company went live for all the key modules, viz. sales and distribution and exports, purchase, inventory, finance, production, HRIS, etc. The production module consisted of processes like cleaning, crushing and filling for which there were some amendments done in the module. The implementation, conducted in phases, targeted the purchase department first, followed by sales and marketing, and then the finance function.

After this, Recon went for production and HRIS. MIS reports specific to the organization were taken up after go-live of phase I which consisted of purchase, sales and finance, while other MIS reports were taken up after full go-live of the ERP.

Khan explained the business process, “It starts with obtaining raw materials which is a little different from the normal industrial procurement as we procure agro-products viz. oil seeds, many of which need to be bought based on seasons. The quality of the raw material, its lab reports and extraction results determine the Final purchase rates. Sales forecasts coming from marketing teams across India provide the basis for production. The sales mechanism is quite elaborate and complex with tiers of distributors, stockists and retailers. We run different marketing schemes for different regions, seasons and products with different permutations and combinations. All of this is handled in the ERP.”

Getting the users comfortable with a disciplined system after they were used to ad hocism was a challenge. Since all specifications for raw materials, semi finished and finished goods are now incorporated into the system, the turnaround time of delivery against order has reduced drastically. The company has gained control over suppliers and sub-contractors and inventory movement. The management gets clear MIS reports of receivables and payables with proper implementation of inter-branch accounting. Dynamic sales analysis has now become possible.

The uniform and smooth flow of information across suppliers, subcontractors and customers makes the process and functioning more organized and efficient. Dead stock has come down remarkably, and stock at any location and its valuation is available online. Receivable and payables are under tight control. A purchase module with a ‘commodity module’ was developed to automate this unique purchase cycle.

renuka.vembu@expressindia.com