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Bharat Kumar

Sundaram Clayton is smiling, thanks to software, or rather the process of software. Technology, by way of a SAP implementation, is helping this auto parts player get cranking fit.

THE process is more important than the software. Sundaram Clayton, a brakes and aluminium castings manufacturer, seems to have realised this truism.

And lunch at Sundaram Clayton Ltd (SCL), during the course of spending close to one working day at the company to learn of its SAP implementation, was only one indication of the emphasis that SCL lays on the `process'. The surprise was not in the good-quality lunch we had, but in that each of us washed our plate using a scrub and some soap water. The area we did this was clean, and we had no qualms about doing it. As we exited, we wondered if that's all there was to the cleaning process. After all, how can a company assume that all its workers, from the CEO to the attendant, are good at washing utensils? T.G. Dhandapani, Chief Information Officer (CIO), assured us that the plates - and all other utensils - thus cleaned were next passed through a steam process. When they emerged out of it, there was little chance of their being dirty.

As we made an impromptu tour of the inside of the canteen, we were surprised to see areas marked "Night" and "Day", in which vegetables were segregated. Asked why this was necessary (after all, it is not mandatory to use a particular vegetable at a particular time of day, right?), the canteen manager replied, "The lag between buying a choice of vegetable and using it is critical. The longer that lag, the more the chances that the item would rot." Common sense, we felt.

The canteen also had a "two-bin" system that dictated that all provisions were stored in two separate boxes. For, when one emptied out, you always had the other to exist on while replenishments arrived. Common sense again.

If the company laid such stress to manage the simple job of feeding its workers in a canteen that was only a cost centre, what won't it do for work that generates profits? Here's a snapshot of its attempts in that direction:

One of the most difficult things about implementing a software system is to overcome resistance by the workforce that is used to the earlier way of doing things. SCL did this by getting information from users such as senior managers, urged them to voice their grievances with the existing method, and then proposed changes. This helped create ownership of the project. Says Dhandapani, "We also asked them what they would give the company in return if those changes for the better were brought in. The requirements were thus focussed and weren't made because of top-of-mind recall. For instance, a plant manager promised a one per cent increase in profits from his corner, if a new system brought in the change that he wanted."

Another interesting promise that technology has, for long, been making is the instant connectivity for the company with its business partners. SCL has achieved this. When its customers release a daily requirement plan and resources are used up, there is an electronic trigger sent to SCL's production units. When the components procured from vendors are consumed during production, an automatic electronic alert is sent to the supplier, quoting the quantity and date of delivery through the World Wide Web. Says Dhandapani, "Suppliers respond to this alert."

This is an example of the juncture at which Dhandapani's team, pulled in from across functions such as planning, marketing and vendor management, comes in useful. Asked if it was too much to ask suppliers to wire up so that they can be adequately connected to receive triggers from SCL for replenishing stocks, Dhandapani says, "That cost is minimal. They only need a PC with a connection to the Internet required at the maximum. No supplier would be unwilling to invest in such equipment."

Dhandapani also stresses the reduced waiting time between the breakdown of a piece of machinery and setting it right. The company uses the short messaging system (SMS) to alert engineers when a breakdown is reported. Once the problem is addressed, the engineers enter the details of the breakdown, reason (code wise), and the details of corrective actions into the system. This collation of information, over time, helps in analysis and countermeasures to prevent further trouble in cases of repeated component failures. The system also triggers a purchase command for a mandatory spare when the relevant date for the replacement comes about. Says Dhandapani, "Having engineers on call has a tremendous effect. Otherwise, there used to be a delay in the paper work required and all that."

Material transactions use a barcode system. Asked if the time was ripe to move to an RFID (Radio Frequency Identification) system, Dhandapani feels, "Barcodes are still much cheaper to use than RFID tags."

Genesis/Breakeven

It was easy for SCL to decide on SAP rather than another software system. Many of its customers, such as Tata Motors, Eicher and the like, were already using SAP. Its sister concern and customer, TVS Motors, was also into SAP. Dhandapani had, in fact, overseen the SAP implementation at TVS Motors, which made him a valuable hand here.

Others using the system weren't alone the motive to decide on SAP, though. Says Dhandapani, "SAP addressed the issue of applying Web technology using the ERP system elegantly." As SCL's export business and customer base increased over time, SCL had to exchange information with clients in real-time. This was made possible by integrating SAP and the Internet application system with the business systems.

The project cost is about Rs 4 crore. It was started in the last financial year and the implementation period was about eight months, involving 150 users. Dhandapani says breakeven is estimated in 18 to 24 months.

Reduced time wastage

Suppliers not only use the Web application to ensure prompt deliveries of raw material or components but also to check their own payment schedules. Dhandapani says that all their payment schedules are on the Web. And payment is sent according to the schedule. Suppliers visit the accounts department only in the case of a discrepancy. This has helped free up the accounting department's resources. But SCL hasn't actually reduced the number of the accounts workforce. In fact, says Dhandapani, "Much more work is now possible with the same number of people there." About 100 suppliers access SCL's Web site per day.

Suppliers also use the latest drawings of components and their release numbers available at SCL's Web site to make sure that they manufacture according to the latest specifications.

On the customer front (i.e, suppliers and distributors of components), around 75 per cent of spare parts orders are received directly through the Web. They also have the option to check the order service status, billing details, price lists in almost real-time, submit warranty claims, and check settlement status and account details.

They also check parts cross-reference lists. This helps because, for the same part, each supplier or customer would have its own number dedicated to that part and that tends to distort information.

Benefits

SCL's inventory costs have already (a few months since implementation has been completed) declined by 25 per cent. While the accompanying table gives an idea of the benefits, Dhandapani sums them up as: linking suppliers and customers with the organisation has improved planning efficiency and service levels, improved operating efficiency from digitising existing processes; cost control through budgetary controls and costing system and reduced time taken for transaction processing.

Future

The company will be involved in the rollout of ERP systems in its sister concerns: Harita Seating Systems and Sundaram Auto Components. It will also include modules such as human resources, payroll and project systems which are yet to be implemented. Knowledge Management and business intelligence warehouse are its other initiatives around the corner.

bharatk@thehindu.co.in

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