The Hindu Business Line : IT implementation helps LNJ Bhilwara group reduce production time, cost

Corporate - Announcements
Info-Tech - Enterprise Resource Planning
States - Tamil Nadu

IT implementation helps LNJ Bhilwara group reduce production time, cost

G Gurumurthy

`Enterprise resource planning took 26 months to complete but it was worth it'

ERP benefits
Bhilwara could reduce its product lead time by 30 per cent
e-tendering had reduced raw material purchase and transportation cost.

Coimbatore , April 5

Globalisation of textile trade has spelt competitive costing and price shrinkage for products at the retail level.

With a shift in manufacture of textiles and clothing already taking place, the cost advantage for the garment producers moving towards low-cost centres have brought down a dramatic drop in the retail prices of men's and women's garments in export markets.

According to Mr Sekhar Agarwal, Vice-Chairman, LNJ Bhilwara group, a vertically integrated textile and clothing group, while the women's garments have shown a 37 per cent price drop at the retail level, men's clothing prices have come down by 25 per cent. In the next decade, another 25 per cent drop in retail price is projected and higher level of efficiency and higher productivity would be factors behind this trend, he said.

Making a presentation on the IT-enabled textile production process at a CII-sponsored conference `Advantage IT' here, the Bhilwara group Vice-Chairman said the reduced product cycle, lower turnaround time, improved response time and total quality management are emerging critical factors in competitive production. In a business scenario where management practices and technology are getting merged, textile business strategy has to be supported by information technology. To achieve this, a strong management is needed to continue implementation of IT successfully.

On the LNJ Bhilwara group's experience in implementing the ERP (enterprise resource planning) solution to link the group's diverse textile production operations, Mr Agarwal said the IT implementation project taken up in 2002 had been one of the complex exercises as it had to be extended over six production plants located in different areas in Rajasthan, Jammu and Kashmir, Madhya Pradesh besides three of its offices. It had to cover the group's 3.4 lakh spindles accounting for production of 85,000 tonnes of yarn, 26 million metre of fabric and 4,000 tonnes of knitted fabrics, 22 million metres of processed fabrics and eight million pieces of garments. The implementation of ERP for Bhilwara took 26 months to complete.

What are the gains of the ERP for group? Bhilwara could today reduce its product lead time by 30 per cent, the e-tendering had reduced its raw material purchase cost and the transportation cost. "Our costs were reduced by 27 per cent and there has been an annualised gain of Rs 20 crore across the group of which 30 per cent was directly due to ERP implementation," said Mr Agarwal.

Reduction in finished goods and work in process inventory, reduction in debtors, improvement in interest recovery, saving in wages and salary and improved export sales apart, the payback for the ERP investment worked out to 3.3 years

"At the beginning of ERP implementation, the issue of `transparency' appeared to pose a big challenge with senior officials warning that the information would be shared by the rivals in the market. But, equally we had to find solution to the issues of accountability," Mr Agarwal said.

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