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DEPARTMENT OF BUSINESS ADMINISTRATION

A TERM PAPER PREPARED ON

MANAGEMENT INFORMATION SYSTEM

OF

SUBMITTED TO Mr. Sanjai Medhavi Department of business administration University of Lucknow

SUBMITTED BY Abhishek Vaish MBA(e-b) sem II Roll no. 54

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ACKNOWLEDGEMENT
I take this opportunity to thank the people who were the part of this project in numerous way , people who have provided unending support right from the stage this case study was conceived. I am thankful to my parents for giving me every support , help and most important their blessings, although they are not physically with me here in lucknow. I am thankful to esteemed faculty of Mr. Sanjai Medhavi Sir for providing me this opportunity of learning. Last but not the least I want to thank to all my friends who directly or indirectly helped me for the purpose.

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INDEX
Project Synergy: Primary Distribution System Secondary Sales System ERP in Manufacturing Intranet and extranet based applications Dabur tackles the secondary supply chain The initiative The Innovation Future Roadmap IT INITIATIVES Major IT Initiatives Bakground Note ACCESS TO SUPPLY TAKE Solutions Wins Order From Dabur Pharma Limited Accenture to manage Dabur's IT functions Bibliography

page no.
4 5 6 6 7 8 8 9 9 10 10 11 14

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Not content with establishing a name for itself in the Indian psyche with its Ayurvedic products, Dabur India now plans take the battle to the FMCG sector and is chanting IT as its battle cry.
Dabur India has established for itself a place of pride in the Indian psyche, and it is not without good reason. When one thinks of the years of experience of selling in the Indian market and the fact that it has managed to stand up to the challenges thrown at it from time to time by small fledglings and even the bigger MNCs, the fact that it is one of Indias most widely recognized company does not come as a surprise. However, not content with just fighting off incumbents, the company now plans to take the battle to its competitors with an entry into the FMCG sector and believes IT to be an indispensable weapon in this war. Most industries use IT in certain distinct phases before evolving into a complete e-business enabled organization. Dabur is currently in one of those phases and believe it to be the fourth major asset of the company (other three being strong brand image, new product development strengths and an extensive distribution network). In an effort to establish itself as a strong player in the FMCG sector, Dabur has already started implementing IT systems and processes all across the company. Says Shukla, The distribution network is the lifeline for an FMCG company and is a greater value adds in terms of IT returns than manufacturing. In line with this, we have outlined our IT focus on streamlining complete outward logistics of the company in the true spirit of an FMCG. With IT assisting in the very build-up of its new image, it surely is an exciting time for IT at Dabur. According to Shukla, the IT department of the company will have important role to play in its IT initiatives. From its early beginnings, the implementation of simple COBOL and FoxPro based applications to the implementation of the manufacturing ERP system, intranet and extranet based applications and establishment of a robust communication and networking system, the team has played an active role in ensuring that the IT infrastructure lives up to expectations and perform its task.

Project Synergy: Primary Distribution System:

For years, Dabur had been using Fox Pro based systems for handling logistics. However, today the companys distribution network has grown, spanning 29 factories, 6 mother warehouses, 47 stocking points, 4 zonal offices and over 10,000 stockists and dealers. In addition, about one hundred trucks are dispatched daily. With distribution pressures rising, technology upgradation was necessary. The company therefore initiated automation of its outward logistics system in April

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2001 with its primary distribution system. Named Project Synergy, this involved implementation of the MFG/PRO ERP system. The system is currently running in over a dozen Carrying and Forwarding Agents (CFAs) and mother warehouses. Over 200 sites in the Primary Distribution will be completed by mid-2008. The significant benefits are already visible in locations where the system has been implemented. These include:

Improvement in sales dispatches to the CFA. The sales earlier were heavily loaded
towards the last week of the month with over 80 percent of sales taking place during this time. This led to a number of problems such as sales returns and cheque bouncing from pushed sales to meet sales targets.

Improvement in collections. Collections have recorded an improvement of about 6 days and

are more evenly spread over the month. This leads to considerable saving on working capital locked up in out-bound logistics.

Reduction in sales returns and unsold stock inventory. Stocks in CFAs are visible to
central distribution planners in saleable and un-saleable categories leading to better management and distribution.

Central management of sales schemes. The schemes and free issues are now managed
centrally at the corporate office and the ERP system keeps a strong check on schemes leading to reduction in misuse of schemes in the field. As the project nears completion, the company envisages more business benefits and distribution planning shifts completely on to the ERP system. With the new primary distribution system in place, the two main benefits that are going to accrue will include reduction in finished goods inventories in the supply chain and reduction in working capital. The savings in these two areas alone will more than pay for the entire costs of project implementation, explains Shukla.

Secondary Sales System:

Once the primary distribution system is through with the implementation process, the next thing on the companys agenda is the streamlining of its secondary sales system. Though it does not follow and is not concerned with the sales at the secondary level, Dabur felt the need to capture this layer to be able to perform more effective sales planning and forecasting. Secondary sales need to be monitored continuously to forecast sales in each monthly planning cycle. Dabur has distinct requirements for secondary sales monitoring in each of its SBUs. While the FMCG and Healthcare Products, making up over 50 percent of sales in Dabur need to monitor only the Pipeline and average sales by leading brands in each region, the Foods division needs to know stock ageing in the trade. The Pharma division needs to look at sales force productivity as this directly translates to sales. Unlike other divisions, sales depend on the five minutes that a medical representative spends with a doctor. According to Shukla, the secondary sales system will be designed to cater to the monitoring requirements of each of these SBUs. The secondary sales system will also provide for sales force automation system through PDAs that can plug-in to a central system through the Web. While in the field, the sales staff can pull information such as doctors history, past freebies given, sales achieved, pending queries etc over

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the Web. Day-end summaries of sales achieved by each sales person can also be tracked countrywide. Along with forecasting, MIS from the secondary sales system will assist in designing of sales promotion schemes, especially in the Ayurvedic products division where number of SBUs is very large compared to the sales it generates. As of today, Dabur uses both automated and paper based information collection systems that will be integrated in the Primary System after it is completely rolled out by mid-2002. Dealers and stockists in the Foods division use point-of-Sale software, the information from which is used to implement a replenishment-based model for Secondary stock control. The company has implemented an integrated secondary system in 2002-03 that covered the needs of all divisions in a single business model and also integrated with the MFG/PRO primary distribution system. This system, facilitated order placement through the Internet and also provide shipment details and payment related information to dealers and stockists. Another area, which the company is focusing its energies on is creation of an intelligent MIS system in the manufacturing, sales, distribution and HR space, all geared towards more efficient decisionmaking. The sales and distribution MIS is on top of the applications and extract relevant information using data warehousing techniques. Similar systems will be set up for other applications too.

ERP in Manufacturing:
Automation of the manufacturing process at Dabur commenced with the implementation of Baans ERP system in 1999. This was the first ERP system implemented by the company in two of the largest plants at Sahibabad and Baadi. Alpha UNIX servers at the corporate office are used for Baan and over 200 concurrent users login from both plants using fibre and PAMA VSATs in the remote Baddi plant. Elaborating on the Baan ERP system, Shukla explains that some of the key modules of the system include manufacturing, finance, intelligent resource planning, master production planning, costing and dealer planning. As the inventory moves through the plant, various modules are synchronized to keep track of its movement. The primary distribution plan becomes a vital element of the manufacturing system. The planning process includes one months fixed Rolling Production Plan (RPP) and two months rolling plan, based on a Rolling Sales Forecast (RSF). According to Shukla, the implementation of the manufacturing system has been very challenging considering that raw materials for Daburs products are largely sourced from the unorganized sector where herbs and fruits are procured. Added to this was the challenge of extensive customization to meet stringent FDA regulations in the QC in Pharma product lines. The system also includes a finance module running at the corporate office. The rest of the smaller manufacturing plants are run on home-grown solutions, mostly developed in-house. As part of its future IT plans, these plants will be migrated to the ERP platform after the automation of the outbound logistics system.

Intranet and extranet based applications:

Almost all applications in IT extensively use the Intranet called Daburnet and Extranet platform to extend the reach users countrywide. These applications are likely to grow extensively in the future as online information and workflow applications form a very critical part of Daburs e-strategy. This will lead to major improvements in the workflow processes within the organization.

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If the application platform is not designed to use the Intranet platform in its native form, then Citrix and Tarantella are used to extend the reach through the Internet using a browser based front-end. A case in point being the primary and secondary systems MIS reports on MFG/PRO systems. However, a number of applications are written using Microsofts Interdev platform, which enables the use of Intranet natively. Some of these applications include multi-location employee management system, helpdesk for IT, document storage and retrireview system, Vaidya monitoring system and card-based attendance systems.

Connectivity:
In an effort to support the applications and systems that have been and will be put in place, the company is in the process of building a robust back-end infrastructure. Shukla points out that in the coming year, investments in building the network are likely to increase as this will be a growth area considering the extensive rollouts both in the primary and secondary distribution areas. The company boasts of a hybrid Wide Area Network (WAN) comprising of PAMA VSAT links from HECL connecting its corporate office to its factories and Zonal offices. The UNIX and NT servers running Baan and MFG/PRO ERP systems, Intranet servers and MS-Exchange servers located at the corporate office form the centre of the network. VPNs and line-of-sight links connect to locations where VSATs are not deployable and locations requiring high bandwidth. KU Band VSATs are used to reach locations in the Primary distribution where VPNs are not feasible. Bandwidth for Internet usage is provided by three ISPs a 2MB link through VSNL, a 256K link from MantraOnline and a 2Mb link for VPNs from Satyam. The next logical step, after enhancing capacities, will be cost saving. For this, the company is installing a dedicated multi-mode fibre from a local exchange to replace voice calls on over 200 copper pairs coming from the exchange. This fibre will also carry E1 lines for data in the future, providing robust last mile links to Daburs network centre. Future infrastructure plans include facilities for video and audio conferencing to sales offices. This will lead to significant reduction in STD and ISD expenses. At the end of day, success of all these IT implementations is dependent largely on how well they are adopted within the organization. Process owners lead almost all large project implementations from the end-user departments. This helps in giving each project a non-IT flavour and increase acceptability amongst the end-users in the organization.

Dabur tackles the secondary supply chain:

In 2001, Dabur decided to tackle its extended supply chain of over 30 factories, six key warehouses, and 52 stocking points distributing over 1,000 SKUs to 10,000 stockists countrywide. The company needed a system to accurately control distribution and sales forecasting to reduce inventory in the pipeline. Dabur went ahead and built a system using Visual Basic and ASP with SQL Server 2000 as the database. It decided not to use a packaged SCM solution due to the high cost and relative lack of complications in its supply chain.

The initiative:

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An in-house developed, easy-to-use, Intranet based data-warehouse displays as-of-yesterday sales, stock, receivables, banking, and other MIS. Over 5,000 ASP pages meet almost all reporting requirements and make this a single source of MIS for all levels of decision makers.

This success paved the ground for the company's supply chain initiative. Fifty-five Ku Band TDMA VSATs were used to link primary distributors to the system. Factories were hooked up using PAMA (Permanent Assigned Multiple Access) VSATs. At some locations VPNs had to be used because it was not possible to set up a dish. The zonal offices in Mumbai were hooked up in a similar manner. The hardware is mostly owned by the primary CFA (Carry and Forward Agent) except for the networking equipment, which is owned by Dabur. In the case of the secondary systems, stockists wholly own the hardware. The primary rollout began in April 2001 and took 16 months. The first six months were used to create a business model common to all divisions (family products, healthcare, Ayurvedic products, and pharmaceuticals), and testing and piloting the same.

The Innovation:
The integrated primary and secondary system has a number of unique features. The features like tight integration of schemes, stockists credit limit control, automated banking of cheque, and online cheque reconciliation have obvious advantages in the primary distribution. These are basically extensions to the MFG/PRO ERP system and not core customizations. Dabur's stockists supply to 1.5 million retailers. Seventy percent of the sales are accounted for by the top 500 stockists. The incorporation of these top stockists into its supply chain is a first for any FMCG company in India. The average sale of each stockists and the current stock are the two parameters. A 'My Page' allow the stockists to see the 'as-of-yesterday' details pertaining to the in-transit shipments, transporter details, back-orders, account statement, cheque status, credit notes, and claim settlements. Details are collected from stockists on a weekly basis. In case of primary distribution points, an incremental backup is sent to the central location when the CFA closes operations for the day. These are computed at night in a process called cubing. And when managers come into office in the morning the information is ready for them. The integrated system allows each Area Manager to plan for the month's sales forecasts, stockists

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performance, and sales officers' performance. The integration allows better control on pipelines in primaries and secondary, brings down inventories, and offers better control on production and sales against a confirmed forecast. The company has added an SMS interface that lets authorized phones query the system for aspects like stock status, credit limits, and current outstanding and division-wide sales. An access control list of mobile phone numbers is used to restrict access to the system. Salespeople can get responses to their queries in a minute with this system," said Gopal Shukla, Chief Information Officer, Dabur India Limited. The problems: The Internet connectivity had to be provided to secondary stockists and wasn't always reliable. Dabur's solution was to offer the option of downloading software, working offline, and connecting later to send in updates. Power was another issue. The company laid down stringent standards. Every stockist had to have an UPS, and in cases where the power shortages are chronic, a genset.

The Benefits:
By integrating its primary and secondary supply chains, Dabur intends to reduce the days of inventory carried in the pipeline by four days from the present 29 days. It aims to save Rs 5 crore by means of this system. Beyond this, the system lets it forecast seasonal spikes in sales and manufacture accordingly. The aim is to shift focus to the stockists rather than the CFAs to get a true picture of what's happening in the market and react faster.

Future Roadmap:
Schemes based on secondary volumes will help control secondary pipelines and sales. Primary sales will therefore come from a resultant 'pull' from secondary replenishments. Sales order servicing can be further improved by taking orders through the Internet, and by setting stocking norms and replenishing stocks to improve ROI of stockists. Sales officers' targets can be set against a measure of secondary sales and pipelines to further improve control and avoid stuffing of CFAs to meet targets.

IT INITIATIVES:

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In Dabur India Limited knowledge and technology are key resources which have helped the Company achieve higher levels of excellence and efficiency. Towards this overall goal of technology-driven performance, Dabur is utilizing Information Technology in a big way. This will help in integrating a vast distribution system spread all over India and across the world. It will also cut down costs and increase profitability.

Our major IT Initiatives

Migration from Baan and Mfg ERP Systems to centralized SAP ERP system from 1st April 2006 for all business units. Implementation of a country wide new WAN Infrastructure for running centralized ERP system. Setting up of new Data Centre at KCO Head Office. Extension of Reach System to distributors for capturing Secondary Sales Data. Roll out of IT services to new plants and CFAs.

Future Challenges
Forward Integration of SAP with Distributors and Stockists. Backward Integration of SAP with Suppliers. Implementation of new POS system at Stockist point and integration with SAP-ERP. Implementation of SAP HR and payroll. SAP Roll-out to DNPL and other new businesses

Dabur India Limited is the fourth largest FMCG Company in India with interests in Health care, Personal care and Food products. Building on a legacy of quality and experience for over 100 years, today Dabur has a turnover of Rs.2233.72 crore with powerful brands like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola & Real. When Founder Dr. S. K. Burman first established Dabur, he had a vision that saw beyond the profit motive. In his words, "What is that life worth which cannot bring comfort to others."

DABURS BACKGROUND NOTE The Doorstep DAKTAR

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Set up in 1884 by Dr S K Burman in West Bengal as a proprietary firm for the manufacture of ayurvedic drugs, Dabur (a short of the name Dr Burman), started off with a direct mailing system to send medicines to villages in Bengal. Initially, the company marketed an allopathic drug, Plagin, to combat the then prevalent epidemic of plague. In 1896, Dr. Burman set up a small manufacturing plant at Garhia near Calcutta for mass production of chemicals and Ayurvedic drugs. In the early 1900s, the next generation of Burmans took a conscious decision to focus more on the Ayurvedic medicines market, as they believed that it was only through Ayurveda that the healthcare needs of poor Indians could be met. In 1919, Dabur set up a Research & Development laboratory to conduct research on Ayurvedic medicines and their manufacturing processes as described in ancient Indian scriptures, and to develop processes utilizing modern equipment to manufacture these medicines without reducing their efficacy The following year, Dabur set up manufacturing facilities for Ayurvedic Medicines at Narendrapur (near Calcutta) and Daburgram (in Bihar). Dabur also expanded its distribution network in Bihar and the North Eastern regions. In 1936, the company was incorporated under the name Dabur India Pvt. Ltd. In 1940, Dabur launched Dabur Amla Hair Oil, and in 1949, the company launched Chyawanprash in a tin pack making it the first branded Chyawanprash in the country. The company expanded its portfolio by adding oral care products in 1970. Dabur Lal Dant Manjan was the first product to be launched under its oral care portfolio. In 1972, Dabur shifted base from Kolkata to New Delhi and started production from a hired manufacturing facility at Faridabad. In 1978, Dabur launched the Hajmola tablet. Dabur set up 'The Dabur Research Foundation (DRF),' an independent company, in 1979 to spearhead its research needs. In the same year Sahibabad factory became operational and this unit was one of the largest and most modern production facilities for Ayurvedic medicines in India at that time. Dabur became a public limited company in 1986 and launched its first public issue in 1994 .

SUPPLIERS:
With over 300 diverse products in the FMCG, Healthcare and Ayurveda segments, Dabur has a huge global network of suppliers and vendors, purchasing roughly 7,000 items with an annual procurement bill of over Rs 500 crore. The Central Planning and Procurement Division (CPPD) is responsible for purchase operations at Dabur, acting in coordination with the Production and Marketing Divisions. In this huge operation we have maintained an environment of total transparency and better governance so that we get the best products at optimum costs. We constantly gear ourselves to challenges through quality checks and cost reduction tools.

Quality checks

16 Strict Vendor Certification guidelines to ensure quality and reliable service; Regular testing and technical analysis of commodities; Maintaining supplier diversity through a dual system of centralized procurement for bulk
commodities and decentralized purchases for greater flexibility.

Cost reductions
Better forecasting of market trends to optimize purchases; Hedging forward markets to gain a price advantage and reduce inventories; Implementing Supplier Relationship Management (SRM) to build effective communication
between Dabur and its suppliers and thereby improve supply chain management;

Incorporating next generation techniques like E-Procurement under an agreement with Free

Markets Inc (NASDAQ: FMKT) to execute online markets. This will help Dabur access a growing pool of certified suppliers, give better market knowledge and increase price transparency. We value long-term business relationships and expect basic norms of good governance and ethical practices from our partners. The people we are looking for should be able to: - Offer competitive rates; - Follow our quality guidelines; - Have well set out distribution chain for uninterrupted supply; - Safeguard against interference or blockades from competitors; - Are willing to abide by contractual obligations at all times.

ACCESS TO SUPPLY:

We are in continuous process of developing strong vendor base for varied variety of items procured. Every vendor is rated yearly on the basis of parameters laid down to gauge vendor performance. Vendors are communicated about the same with an objective to improve their performance and build long term relationship. Suppliers of quality items procured by Dabur are welcome to furnish details of their products, establishment and other parameters as mentioned in Vendor Registration Form. We have a welldefined process laid out for qualification of a supplier as Approved Vendor. It includes obtaining samples from suppliers for quality assurance and visit of Dabur team to vendor location. Quality parameter of inputs, which in turn determine the quality, and cost of output is laid down meticulously for each items and strictly followed and adhered to in procurement process. Although efforts are made to minimize entry barriers and facilitate win-win situation for long term relationship but still complexity of business, cost, and quality and supply limitations build certain entry barriers.

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ENTRY BARRIERS:
Given the variety of items procured from unorganized agricultural produce to localize packaging material. Risk factor also varies from item to item. Seven major barriers are discussed. Capital Requirements - The costs of becoming established in the industry. Obviously the amount will vary depending on your area of interest, from several lacs for metal caps to couple of crores for polymer. The greater the capital requirement, the greater the need for explanation for accepting this risk. Economies of Scale - Depending on your area of business, a high volume may be necessary for you to be efficient. Achieving this high volume may require larger facilities or a large labor force. Existing organizations are going to have the benefit of having the resources in place to react to whatever market forces have created the opportunity you have identified. It is essential to explain to what extent Economies of Scale are a factor in your business and how you plan to overcome this barrier.

Cost Advantage - Although these do exist with Economies of Scale, Scale is not necessary. Many times the first entrant into an industry or market will be able to negotiate the best contracts with suppliers or distributors. These relationships leave new comers at a disadvantage. Also, first entrants or existing businesses have an advantage on the learning curve that allows them to pursue cost issues more effectively. Are there any areas where existing relationships are going to put you at a disadvantage? Product Differentiation - You have identified an opportunity to provide a product or service profitably. If you are successful, your success is going to attract attention. One problem you will face is when another firm with name recognition and brand loyalty for their current offerings decides to follow you. You will have to spend large amounts on promoting and differentiating your offering to combat an established firm's goodwill. If there is no major established player in your industry, who in a related industry would be likely to follow your lead? Distribution Channels - The extent of this concern depends on how you are planning to get the product to our manufacturing facilities. Existing suppliers with spread out manufacturing facilities or well-set distribution system will be in a position to effectively cater to varying demand and quality parameters Legal Restrictions - Many claim that the only barriers that can not be overcome with shrewd planning and business sense are those created by government. It is necessary to investigate and explain any ordinances, laws, taxes, etc. that will have an impact on your business. Tax benefits or subsidies will result in direct cost advantage.

Retaliation - If you are entering the market of other established businesses, do not expect your company to be welcomed without response. There are a host of responses available to the competition depending on their market position. Reactions can range from price slashing to negotiating exclusive arrangements with suppliers and distributors you would have worked with.

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Time must be spent anticipating the reactions of existing businesses and determining the impact these reactions will have on your organization

TAKE Solutions Wins Order From Dabur Pharma Limited

Provides Comprehensive Regulatory Compliant Information Management Solution CHENNAI, India--Aug. 23, 2006--TAKE Solutions, a technology enabled business solutions company with leadership in the Life Sciences and Supply Chain Management verticals today announced an order win from Dabur Pharma Limited, India's leading cancer research and anticancer product company and an associate company of Dabur India Limited. TAKE Solutions will implement its flagship product - PharmaReady(TM), part of the recently launched One Clinical product suite which is a web-based information management system specifically designed for the Life Science industry. "The implementation of a fully integrated solution ensuring an appropriate management of our regulatory dossiers and a compliant solution for electronic submission is part of our current strategy to support product development and registrations worldwide" said Dr. Claude Hariton, Dabur's Global Head of Regulatory Affairs and Drug Safety. "It was our confidence in TAKE Solutions' ability to provide us with a single source for regulatory compliant technology solutions that confirmed Dabur's decision to work with them." Announcing the order win, said Mr. Sridharan, Managing Director, TAKE Solutions, "We are extremely delighted to add a reputed brand like Dabur to our customer portfolio. We are confident that with the implementation of PharmaReady(TM), Dabur will be able to access multiple interfaceenabled documents authoring, publishing, and electronic submissions resulting in faster and easier document management." PharmaReady(TM) document management (DMS), integrated with PharmaReady(TM) publishing tool (eCTD), will provide intuitive electronic content assembling with integrated document management and publishing features to support all major regional templates, life cycle management and consolidated submission reviews.

Accenture to manage Dabur's IT functions

Dabur India Limited on Thursday said it has signed Accenture to outsource its information technology infrastructure and application management function. Under the 10-year agreement, Accenture would manage Dabur's IT functions, including applications management, and provide consulting assistance on the company's business plans, a Dabur release said in New Delhi. Accenture would also design, build and run IT systems for the supply chain and secondary sales functions. The detailed service level agreement would be defined in the next month and the existing IT employees of Dabur will transition to Accenture with consistent terms of employment, it said.

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"The outsourcing model will help us concentrate on our core business areas of marketing and distribution of consumer products. This relationship will help the company gain access to global IT best practices. Apart from strategic inputs on IT, Accenture would provide comprehensive consultancy to Dabur to achieve our strategic vision," Sunil Duggal, CEO, Dabur India Ltd,wasquoted as saying after signing the agreement

BIBLIOGRAPHY

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http://www.dabur.com/en/Suppliers/default.asp http://www.expresscomputeronline.com/20020225/ebiz1.shtml http://www.networkmagazineindia.com/200312/events05.shtml http://www.scmdirectory.com/index.php www.daburpharma.com/htmls/contact.html - 21k http://www.rediff.com/money/2004/mar/04bpo1.htm 202.54.124.133/money/2007/feb/06dabur.htm - 27k