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A SUCCESSFUL ERP IMPLEMENTATION

TEAM:
1. Aayush Modani
2. Andrews Joseph
3. Arkaprava Goswami
4. Deepak Pandey
5. Kishore K
6. Mugdha Kirloskar
7. Prasanth Srinivasan
8. Sanjay Sharma
9. Soumya Patra
10.Sumeet Pandey
Company Profile
• Industry Type: Iron and steel.
• Ownership: TATA group.
• Geographical Presence: Headquarters in
Mumbai, global presence in more than 50
countries.
• Product Lines: Soft iron, Iron, Cast Iron, Alloy.
• 10th largest steel producing company in the world
and 2nd largest in India with 25.11 million tons of
output every year.
Historical Overview
• Established by Jamshedji
Tata on 26th August 1907 in
Jamshedpur.
• In 1990 the company
established its subsidiary in
New York named Tata Inc.
• Changed its name from
TISCO to Tata steel in 2005.
• Known for its value based
production practices.
INFORMATION INTENSITY MATRIX

high

IRON AND BANKING,NEWS


STEEL PAPERS

Information
intensity of
the product

RAILWAY
CEMENT
TICKET,GOLD
Information
content of the
low product
low high
1997-98 Steel prices at all time low

• World class operational excellence and


to be amongst lowest cost producer
• Becoming a learning organization
• To be the supplier of choice to the customer
Through world class products and services.
Shop floors In house systems

Exchange and retrieve of Mainframe, not integrated


data difficult with each other
Problems Reason
• Little visibility of • Stand Alone
information system
• Exchange and retrieve of • In house
data systems in shop
floors
• Delay in publishing • Absence of
monthly account integrated cost
• No correct information systems
about materials • Fragmented
available (at branch work at branch
office) office
CATEGORIES OF STRATEGIC RISK

EASY

SUSTAINABILITY
QUICK WIN
RISK

Ability to
execute

IMPLEMENTATION
DUMB IDEA
RISK
Size of
opportunity
HARD

low high
ERP
PHASE 2:
PHASE 1: • Procurement
• Financial accounting
• Order generation and • Material management
fulfilment process and costing
• Asset accounting and
plant maintenance
modules
PRODUCTION CUSTOMER
DRIVEN
DRIVEN
Customer satisfaction
• ERP implementation was
proposed to solve two major Transparency
problems
• Integrate new and old Quick decision making
systems.
• To make the complete Credibility of data
systems customer friendly.
Responsiveness to customers
WHY SAP ?
• There was no standard ERP package available for the Steel
industry.
• Company found large gaps in existing functionalities
required and packages available.
• Considering factors such as Cost, Time, Available
functionality, Inter Operability, Service Support and Future
Organizational requirements, - SAP was selected.
TWO PHASE IMPLEMENTATION
• Phase 1 - Project OG & F:
• Improvement of Order Generation and Fulfilment as a pilot
implementation.
• Phase 2 – Project Rupantar: (Transformation)
• Better revenue management through improved gross margins.
• Implementation of Procurement, Financial Accounting, Costing,
Asset Accounting modules of SAP R/3.
SAP R/3 ARCHITECTURE
• SAP R/3  R - Real Time Data
Processing.
• SAP R/3  3 – 3 Tier
Architecture.
• Database
• Application Server
• Client (SAP GUI)
PHASE 1 - OBJECTIVES
• Identify the value of finished goods.
• Online credit check for better receivables management.
• Credit policy to reduce overall customer debt.
• Enable profitability analysis for net realization of value.
• Integrate online sales process with financial accounting systems.
MC FARLAND’S STRATEGIC GRID

high

FACTORY STRATEGIC
Impact on
business
operations

TURN
SUPPORT
AROUND Impact on
strategy
low

low high
PHASE 1 IMPLEMENTATION
• Started in February 1999.
• Accelerated SAP ( ASAP).
• 5 steps
• Project Preparation
• Business Blueprint
• Realization
• Final Preparation
• Go Live and Support.
• Went Live on November 1, 1999.
RESULTS OF PHASE 1
• Improved information visibility.
• Better customer service.
• Strong credit policy.
PHASE 2 – REASONS
• There was no set process for consolidation of accounts and
subsidiaries across the company.
• Product wise costs were not easy to measure and inventory across
the plant ( Maintenance, Repair & Operational) were of high priority.
• These were the areas where major cost cutting was possible.
• Cost savings could be achieved in the procurement area.
• Process maintenance could be improved.
PHASE 2 – IMPLEMENTATION
• Started in November, 2010.
• 5 Steps
• Project Preparation
• Design
• Build
• Transition
• Go Live and Support
• Went Live on December, 2001.
RESULTS OF PHASE 2
• Reduction in lead time for sending approvals from 60 days to 20 days.
• Improved availability of production assets due to improved
maintenance.
• Reduced effort for complying with statutory requirements.
• Cost conscious decision making was possible with respect to materials
and contract services.
CHANGE MANAGEMENT
• Top Down Approach was followed.
• All major change initiatives were identified at earlier stages itself and
shared with key members of management and stakeholders.
• Necessary information about implementation of phase 1 and its
success was communicated to the employees.
TRAINING AND KNOWLEDGE TRANSFER
• SAP Knowledge to Core Team.
• Specialization Competency – ( ABAP & BW).
• End User Training.
• Hand Holding.
CHALLENGES FACED AFTER IMPLEMENTATION:
• New system had made the transactions more disciplined and there
was a loss of flexibility.
• Users had to enter more data, else transaction was not be carried out.
• More than 2000 users were affected and everyone faced the same
problem.
• There were lot of changes in roles and responsibilities of individuals.
• Work force became redundant in some areas of the organization.
• Core team received a lot of complaints and suggestions.
HOW THE CHALLENGES COULD BE
ADDRESSED?
• Site Champions could have been created. They will serve as local
helpdesks in their department and area of work.
• Training for new roles and sufficient information about the
responsibilities of the individuals could have been clearly explained
and communicated.
• Management could re-deploy those employees whose work were
automated into other divisions.
• Change Control Board, which can be headed by some senior person
could have been set up to address the complaints and suggestions.
How to measure success
• Decrease in Inventory carrying costs.
• Turnover growth rate.
• Manpower costs came down.
• Better credit management.
• Customer response.
• Legal Compliance.
• E-presence.
• Ease in Internal Auditing.
STRATEGIC ALTERNATIVES MATRIX

high

GLOBAL TRANSNATIONAL
STRATEGY STRATEGY

Degree of
global
integration
HOME
MULTIDOMESTIC
REPLICATION
STRATEGY
STRATEGY
Degree of local
responsiveness
low

low high
LEARNINGS
• To implement a project – employee training is must.
• More risk more profit.
• Big bang approach can be an option for a large scale project.
• Centralised implementations reap more benefit than individual
implementation.