Case Study

IS Implementation at Arvind Mills Limited

The flagship company of the Lalbhai
group manufactures and exports denim
(over 150 varieties) and shirting. Through
its subsidiaries, it also manufactures and
markets Arrow shirts and Flying Machine,
Lee, Newport, and Ruf & Tuf casual wear
for the domestic market. The company
has a tie-up with Alamac Knits Fabrics
Inc., USA, to manufacture knits.
Critical Business Factors for ERPbased IS at Arvind Mills The critical
business factors which lead Arvind Mills
to the adoption of the ERP packaged IS
can be listed as follows:
/. The inefficiency of the existing market
information systems: The existing market

information systems were inefficient to

handle
the
day-to-day
increasing
workload of the firm. This was mainly
because most of the legacy systems
(existing systems) were isolated (island)
systems and had very little or no
interface between them. Also the legacy
systems were developed by in-house
software engineers, whose retirement
from the firm has resulted in inefficient
handling of the systems. Also another
major drawback of the legacy systems
was that modifications/updates were not
possible to them, whereas most of the
ERP packages offered high flexibility in
modifications and adding of updates.
2. The modernization of the production
process demanded the need of an ultra
modern market information system: During

1997 Arvind Mills underwent major

modifications in the production process
and set up an ultra modern plant in
Santej. So the management felt that as
they are having the most advanced
production technology in the world, their

management information system should

also be of state-of-the-art technology.

3. Difficulty in integrating various island

systems: The Arvind mills management

found it extremely difficult to integrate

the
existing
in-house
developed
information systems. Most of these
systems were suitable to the particular
business function it was made for and
could not interface well with other
systems.
4. The requirement of a better CRM: CRM is
gaining importance day by day and has

become essential for the survival of any

business. The textile market is becoming
more and more competitive day by day,
which necessitated the need of better
customer relationship management. This
will help the firm to cater to the needs of
the customers more efl ciently and thus
retain them. The most important feature
in this case is the trackability factor. The
customer at any point of time can log into
the system and find out where his order
is? What is the status of the order at
. .4 better production planning process: The
production

planning in Arvind Mills was an extremely

tedious
job as most of the production was MTO
(made to
order). Coordinating the production
process and
stream lining the production function with
other
departments could be handled more
efficiently by
an ERP package like SAPR R/3. Also the
package
helped in defining the capacity limits to
utilize the
capacity to the maximum.
8. Tamperproofness: As the system
requires data
inputs at all the stages and identifies
orders through
primary
keys
over
different
functionalities, the
system is absolutely tamperproof. Each
and every

present and how long it woul'1 take to

process and likewise.
5. Business
advantages
(marketing
advantages): The adoption of a state-of-

the-art information system would give

Arvind mills a competitive edge over its
competitors. The marketing manager can
confidently take orders by just logging to
the system and find out the different
order status and can tell the customer
when he can deliver the order.
6. The advantages of a better SCMreducing
inventory costs: The package facilitated an

efficient
supp.
chain
management
environment, which would help in
coordinating supply with production and
avoid extra inventory build up in the raw
material stores. Also the package
supported efficient implementation of
other
operations
management
techniques such asJIT (just in time),
logistics management, and production
scheduling.
bale opened should be reported and
reentry in the
database requires to be done in a very
difTicult
method '(only through the knowledge of
the
concerned supervisor. This makes the
system all
the more tamperproof.
The Selection of the Consultancy After
the idea of upgrading to a better ERP
package
was
thought
about,
the
management went for a search of a wellknown and well-experienced consultancy.
After
evaluating
the
different
consultancies based on

their track record of experience in

successful ERP implementation, Price
Water House was selected.
The Reason for Selecting SAP RI3 Once
the management felt the need for a
State-of-the-art information system, they
searched for the best ERP package
available in the market with the market
that suited their business requirement.
One other thing that weighed heavily on
them while selecting the package was
that implementing a world-renowned
package will bring more advantages in
terms of functionality and recognition in

the global industry.

The different packages considered
include
SAPR/3,
BaaN,
PeopleSoft,
ORACLE, RAMCO, and TIM. These
packages were evaluated on the basis of
certain criteria. After evaluating the
different options based on the criteria
and their suitability to the condition of
Arvind Mills, SAP R/3 was selected.
SAP R/3 was preferred over others
mainly for the following reasons:
Suitability to the business environment
of Arvind mills
Across the board functionality

Telephon

OLAP
CRM
Data
I
mining
Finance

Querry

Production plan
Plant

Business intelligence

MM&WM

maintenance
e -> Fax
Data mart
Figure

IS architecture at Arvind Mills

Strategi
c
plannin
g

 Global presence of the company

(software provider)
More suitable for processing industry
than other software packages (one of
the major problems faced by Arvind
Mills was capacity planning at the
Loom shed. The legacy systems and
other packages could not efficiently
carry out the capacity planning
process.)
Successful track record (SAP is one of
the earliest available ERP packages
and has proven its consistency and
efficiency over the years.)
The largest sold ERP package
Rich repository of best business
processes and practices
Mark of quality for the customers
The stepwise implementation of SAP R/3
in Arvind Mills SAP R/3 was implemented
in Arvind Mills in four steps, over a period
of 3 years from 1997 to 2000.
1st Phase: Time period-1997 Oct To 1998
April.
The
first
phase
included
commissioning of SAP R/3 in Santej
mainly the shirting dimission, bottom
weights, knits demission, etc.
2nd Phase: Time period1998 OctFebruary 1999. The second phase
included commissioning of SAP R/3 in
Khatrej plant, Arvind Mills Limited, Arvind
Exports,
Rope
Dimission,
Arvind
International, etc.
3rd Phase: Time periodMay 1999August 1999. The third phase included
commissioning of SAP R/3 in AshokaSpintex, Cotsyn, Rohit Mill, DDSP, sop,
etc. and logistics information systems.
4th Phase: Time periodSep 1999-2001.
The fourth phase focused mainly on
translating the information collection
(data generated) into decision making.
The data mining tools are used for the
same.
Networking in Arvind Mills The entire
organization is connected through:

WAN (VSAT, Radio link and DoT, ISDN)

. VSATKOLHAPUR, Mumbai,
Bangalore.
Delhi . Radio linkSantej, Arvind
Intex, Rohit,
Ankur Textiles
LAN with in the plant
Helpdesk SingaporeOSS Server X-.25
Some of the Hardware used in the
organization
are:
ServerDec UNIX
RouterCisco 3640
Switch, Hub
Firewall
Application ServerE3K Sun Solaris,
E450Sun
Database serverSun E4K
Magnetic TapesDLT
Some of the important components of
the networking system are the 'hub',
'switch', and 'gateway' of the network.
The essential hardware for the central
hubs, switches, and gateways are
provided by Cisco, which is the world
leader in networking equipment.
IS Impact Analysis We see IS not as a
technology solution, but as a business
solution.
This was the mission of the company
while upgrading their information system
technology with the implementation of
integrated IS. The objective was to build
an information system that would link up
the organization with the management as
well as the information technology
adopted by the group. This system was
supposed to help them operate real-time
through innovative business solutions
that would help the company face the
competitive
environment
and
new
business challenges. One more critical
reason for the company going the whole
hog in implementing the ERP system was
that they wanted the state-of-the-art
system to be installed so that it would
give them a leverage with their national
and international clients. They also
wanted their customers, both national as
well as international, to find the system

convenient and comfortable to work with.

With these objectives in mind the

implementation of SAP R/3 was done in
the following functions:
Finance and Control (FIGO)
Production Planning
Plant maintenance
Materials management
Sales and distribution
Quality management
Warehouse management
Finance and control are central to any
organization while implementing an ERP
package. Production planning (PP) was a
very critical area, which contributed the
major process in the entire organization.
Problem Areas Where the Company went
wrong?
In the selection of the consultantsShould instead of directly consulting a
software consultant Arvind Mills should
have
consulted
a
management
consultant like McKinsey or some
management institute which will be in
a better position to judge the business
needs of the industry and then suggest
the best option that the company could
take with regards to the desired
package as well the vendor the
company should choose. This will also
remove the biases as this is an
independent consultant with no motive
for a sales pitch.
In selecting SAP R/3, it gave more
weightage to the reputation of the
package as well as deciding upon the
package to enhance the image of their
Santej plant which is of global
standards.
Security related issues were cropping
up as people from different plants were
accessing the secure database area of
the systems. More efficient security
systems should be put up.
No follow up on data analysis using
data mining tools.
No one is responsible in case of multi
login name entry problems. By giving a
single login to multiple employees, the

exact cause of the problem

regards to information input

with

cannot be located by the management

in the
production system as workers change
in the
shifts. Lack of proper orientation of
the employees
Right now the senior management of
the company feel that they have not
achieved such significantly high benefits
that they had expected prior to the
implementation of SAP /3. On the various
interviews we had with the management
and the department heads we found out
that the major area of concern is in the
production
department.
With
the
implementation of SAP R/3 they had put
in systems that necessitated standard
costing procedures for the textile
production. The issue here was more of
that relating to the human resources
management.
The operators in the production line
were not enthused nor or willing to key in
the data required to be entered in the
system so that it can help out in getting
better information about the process as
well as the costing. As mentioned earlier
the human resource issues are very
critical to any radical change in the
processes of the organization. This
indicates a lax on part of the team to
properly take stock of all critical angles of
the change issues.
Adoption to the new organizational
structure
Though the top management had made a
successful
transition
to
the
new
organizational structure, problems still
persisted when it came to changes in the
lower management and operator level.
This indicates a lacuna in the entire
process of training and managing the
change process.
Changes in the Current Goals As the
perceived benefits have not been
accrued by Arvind Mills, there has to be a
radical change in the entire outlook
starting from restating their mission with

regards to the new environment. When

the Santej plant was being constructed
'denim' was having a surging market
globally. Now everything has changed
and the world over the demand for denim
has drastically fallen. This needs to be
reflected upon as well.

Effectiveness of the Overall Performance of

the Reengineered Group Plant maintenance
module helped in automatically updating the
required material in the plant as and when
required. It also has an automatic stock and
process update which helps the supervisor to
do his tasks. Materials management (MM)
benefits the entire process by keeping track
of all the goods required by the various
processes of textile manufacture. Quality
management keeps track of all the testing
done on the product, which is available in the
database. This is a major advantage as the
complaints, if any, from the customers can be
tracked back to the source of the product, the
materials that went into it as well as the
persons involved in the process. It can also
help in verifying the claims made by the customers regarding the complaints and is
proving to be quite handy.
The
warehouse
module
helps
by
predefining the destination of all the rolls of
textile in the huge company warehouse, thus
making it convenient for marking the lot. This
also helps during shipment of the lot. The
tagging ensures that proper tracking of the
product is done. The sales and distribution
module has become one of the leading
performers in the entire package.
The main benefits have been in making life
a lot easier for the marketing manager who
can now keep track of the entire process of
manufacturing. On request of the customer,
the manager can, at the tap of his hand, get
information regarding the production facility
status and thus convey the exact date of
delivery. This will also enable the mangers to
perform according the workload on the plant
while getting orders. It also ensures reliability
on part of the plant. The major advantage the
customers get is that they can keep track of
their order instandy.
There has also been a reduction in the
number of employees in non-core areas like
software development. The legacy systems
had forced a heavy expenditure in the
maintenance of excess workers in the
systems department for a long time.

Centralizing of the entire system has reduced

the workforce required in various non-core
activities.
With regards to strategic positioning, the
company has an advantage as it can ensure
that its internal customers do work in a more
efficient way. They are also made responsible
for achieving results. Redefining the way the
managers handle the work can create new
benchmarks. They have access to the whole
lot of information that can be put to use by
the better management of resources and
time. Implementation of various processes
like
data
warehousing
and
business
intelligence systems are going to prove even
more helpful in making the organization more
proactive.
The main strategic advantage for the
external customers is that they will have
better assurance about the availability of the
product as well as the reliability of the
system, and will be able to find out where
exactly their product is in the entire
manufacturing process. This makes the
system more convenient and dependable for
the customers.
This will ensure more satisfied customers,
which can be translated into more business.
International clients need sourcing from
players of global standards in reliability. The
implementation of SAP R/3 will definitely
make the internationa customers prefer
Arvind Mills to other players in the sector who
have not implemented a state-of-the-art
technology to make their systems more
dependable.
In summary, the observed benefits of IS
implementation at Arvind Mills are:
System integration
Avoidance of duplicate requests
Savings made in labourremoval of inhouse system development team
Savings made by stopping the services of
the WAN service provider
Improved system efficiency through
tracking of orders
Increased number of customers
Improved efficiency of the marketing
department.