The Hindu Business Line : Scoring with accuracy

DATA should be entered once at the point of occurrence and not replicated again. That, to eWorld, symbolised the success behind BHEL-Trichy's success with its ERP initiative.

G Venkataramani, additional general manager, planning and development at BHEL, emphasises this point - on accurate data - more than he does any other. And that seems to have been the philosophy on which not only the entire implementation of SAP's enterprise resource planning (ERP) package at BHEL's Trichy plant rests but also forms the foundation for its knowledge management. The plant makes boilers, valves and tubes.

Venkataramani spent about half a day with eWorld recently to dwell on his company's experience with the implementation of the software in the last five years and on knowledge management initiatives that were initiated recently. Read on:

BHEL's case is interesting. It began evaluating ERP options in the late nineties but began implementation about four years ago.

That's an incredible amount of time spent evaluating software, even for ERP! Venkataramani explains, "We took two years to evaluate options in the ERP market."

And, guess what? BHEL's evaluation included questionnaires on each module, a booklet that contained several hundred questions that prospective providers had to answer. BHEL shortlisted six players and whittled it down to a final two, SAP and BaaN. It then chose SAP.

Venkataramani says, "We visited installations of these products to see what went on before implementation began and to check out the challenges that lay ahead of us at that point."

So what were the learnings? The first thing we insisted on is that change of processes (also called as business process reengineering) should occur along with the software implementation. You can't change the processes after installing the software. Process changes before software installation take more time and could be more painful."

ERP was implemented in November 2001 for the Valves product and then rolled out to all other products in December 2004. Both the implementations were done by IBM Global Services.

But don't users often complain that ERP vendors tell users to stick to what their software says rather than customise as required? Says Venkataramani, "We recognise that international vendors come with some best practices that they have seen the world over. Some customisation is required but we stuck predominantly to what was on offer."

This, he explains, was because "we believed that bringing in IT should not result in the existing processes being automated. There has to be a change for the better, with a transition from batch mode to real time information."

`Batch-mode' refers to the manual updates of records that we had done at the end of a day, week or month. With automation, it is easy to capture data as and when it is updated, or, in real-time.

When the implementation began, it was to bring in most departments in BHEL into the system. Departments such as sales & distribution, engineering, production planning, maintenance, materials management, quality management, finance and controlling came into the loop. Interestingly, the company did not opt to bring in the human resources module at the time.

TCO

TCO is a term that IT companies typically throw at you when you ask difficult questions. The expansion, total cost of ownership, sets you thinking and keeps you quiet for a while. But, when a user talks about it, it does seem to make sense. Says Venkataramani, "Our expenditure - both initial and continuing - is for about 400 software licences, fees for our implementation partner and a 17 per cent annual maintenance fee for 25 years. The system connects about 400 PCs and between 25 and 30 departments. The returns, he says, are obvious, which is surprising, even, for an IT decision-maker to say. The normal response we get to a question on returns on investment typically goes, "It is difficult to estimate. But the cost of not doing it is immense."

However, Venkataramani was able to give a clear example of the benefits of automation. BHEL actually did away with an entire department. He explains, "People in the materials planning department have been redeployed."

Here's how the change occurred: When an order for boilers came in through the marketing department, it was sent onto the materials planning department, which checked the availability of materials and placed orders for the materials needed. The production process would commence. Now, the system checks the availability automatically and raises indents for purchase.

This means that 40 people who took between 10 and 15 days to plan for one order are now otherwise deployed.

Learnings

Says Venkataramani, "End users have to be involved more and more. The interaction between core team and users is critical."

The `core team' is that which is done up choosing at least one from each department that is to use the ERP system form. The members of the team then interact with end users who could be from their own respective departments.

Says Venkataramani, "We look for individuals without whom the department would be terribly handicapped. That is the kind of value they should be adding to the department. We then pull them into the core team so that they can effectively communicate what needs to be done in their own departments."

Even here, there are a few disadvantages. Even if one's own department-mate goes into the core team, there is a tendency to look at that member as one of `them' and not as one of `us', says Venkataramani.

Other benefits

What is the most obvious advantage from an ERP system, other than ensuring data accuracy? Says Venkataramani, "Earlier, there was no reconciliation and revalidation of processes and of data. Now, it is possible. For example, while the finished goods are handed over by shop to Shipping, validation takes place to check booking of the raw materials and components in production orders and also confirmation of shop activities, to effectively capture the costs. Also, the quantity handed over is cross-checked with the demand created against the customer order so that any mismatch arising out of erroneous vendor data is checked for corrective/preventive action. ERP also helps you maintain tight budgetary control."

Now, with regard to movement of material from one department to another, all paper work has been eliminated.

Importantly, cycle time has been reduced across several processes. Cycle time reduction (or the time taken for an event - such as a file moving from sales department to production planning) to occur has been in some cases as high as about 75 per cent. On average, cycle time has been reduced by about 52 days, or close to 20 per cent.

Other benefits include elimination of about 300,000 sets of papers, especially for the stores department, since everything has come online.

Intangibles

There are intangible benefits too, in engineering, for example. Says Venkataramani, "The status of part numbers is configured to prevent usage of obsolete part numbers." Clearly, this saves headaches at a later stage. In quality, non-conformance to quality standards is captured online so that the management could evaluate why it occurs and ensure that it is avoided.

New hardware

BHEL Trichy has this year chosen to upgrade its hardware. It has gone in for an IBM P5 570 server-cum IBM's DS 8100 SAN storage solution. Venkataramani says these are "virtual servers." That is, there is no real physical demarcation but compared to a mere two servers earlier, the new system with 16 processors, can be used as one with 160 servers (thanks to micro partitioning technology). Since these are virtual, he explains, it is easy to shift load from one to another whenever a particular batch process requires additional processing power. The storage system is capable of handling more than 20 tera bytes of data. The components of the system, earlier connected through copper wire, are now connected through fibre-optic cables, capable of processing two giga bytes per second.

There is also a back-up facility with a similar system to be housed about 1.5 km away.

Knowledge management

R. Sandanadurai is a technology writer's dream contact. He says, "Knowledge management is no big deal. Some IT vendors tend to use jargon to fascinate people. It is mere automation but is important, for, it enables designers (in this context) to take the right decisions at the right time, without failure and consistently so."

In an ideal situation, he says, we should not require an engineering designer to know good English. "His skills lie in designing, not reading material on designs and interpreting them in a standard fashion every time he designs."

Hence the need for a knowledge management system which helps in: accurate choice of designs done earlier for reuse in new designs; and in ensuring that that the same design is used for the same requirement, independent of how an engineer interprets it.

Says Sandanadurai, "Every tender has some technical specification. Earlier, we had 20-volume booklets describing the scope of technical specifications. An engineer - be it in the area of civil, mechanical or instrumentation engineering — would have to comprehend and convert to data. Later, he used his understanding to come up with drawings."

The new, proposed system is simpler: It integrates all existing in-house software as well as 3D solid modelling and 3D plant modelling software tools. If there is a 100 per cent match with an earlier order, then reuse the plot drawings. This will help reduce cycle time from 3-6 months to about 7-15 days, he says.

To facilitate this, Sandanadurai's team has come up with an e-vault that helps store, retrieve and manage drawings for future use. He says, "When we come across an order for say, 210 Mega Watt plant, reuse of drawings is made thanks to the memory of some good people here." It was by trial and error that you got to the right drawing. Sometimes, you didn't at all, which made the earlier system inefficient. Now, about 5,70,000 drawings have all been digitised and stored in the e-vault. Before going into the vault they (the older, hard copies) go through the process of scanning and indexing so that users could retrieve them easily in future.

Picture by Sampath Kumar G.P.

bharatk@thehindu.co.in

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
A tough nut to crack

Exciting edge to match

A sharp eye out

Getting the message

Scoring with accuracy

Slow system that hangs often

`Browser Wars are on'

Handle with care

Quiz

Business in the search economy