A journey well begun

In a historically technology-shy industry, Patel Integrated Logistics Limited (PILL) and its erstwhile constituents were the pioneers in IT adoption. Now PILL is determined to elevate IT to the status of a strategic tool.

Paresh Kamat, AGM, IT, Patel Integrated Logistics Limited (PILL), has his hands full. Created by merging the two logistics companies of the Mumbai-based House of Patels, PILL has embarked on the exercise of transforming itself into a complete logistics solutions provider. Kamat’s responsibility is to ensure that his IT department supports the new entity’s business objectives. His comrade-in-arms is Paniraj Murthy K, AGM, Fleet & Vendor Operations.

Rapid economic growth over the past three years has seen the logistics market registering a growth rate of over 9 percent annually as demand for logistics services grows. At the same time, customers have also become more discerning, demanding value-added logistics services and willing to bear that extra cost for superior service levels. Increasingly, customers prefer to outsource logistics to integrated logistics service providers than deal with multiple vendors.

Said Murthy, “Patel Roadways Limited (PRL), our flagship company, is primarily into road freight while Patel On-Board Couriers (POBC) is into co-loading of courier and cargo. At the macro level, there was a lot of business integration taking place. We therefore decided to merge POBC with PRL to exploit synergies and provide a single window access to the customer.”

Post-merger, the Rs 300-crore PILL has lined up a range of logistics services including surface transportation, air cargo consolidation, international air freight, on-board courier, retail logistics and warehousing under one roof.

From an IT perspective, the challenge has been the integration of the IT applications of the erstwhile constituents of PILL. Said Kamat, “At the physical level, the companies have merged. We have to merge at the information level too because we have to provide complete transparency to the customer. Whether it is the Web site, products or applications, IT has to ensure that the customer gets a single view.”

First mover

PRL and POBC were early adopters of IT, which set them apart from the tech-phobia then prevalent in the Indian transportation industry. But the focus was more on automating administrative functions than on business processes. In the absence of a cohesive approach, islands of information emerged at all levels. Without data integrity, reconciling business processes and financial data was difficult. According to Kamat, more time was spent in data punching than report generation and analysis for strategizing. Kamat’s mandate was to streamline business processes through the use of IT. He revealed, “Over the last 3-4 years we have been transitioning from legacy systems to high-end applications. We have invested Rs 5-6 crore in upgrading our IT systems and infrastructure.”

Kamat opted for Web-based ERP over the more prevalent client-server model of deployment. The evaluation of PRLWEBXpress, PRL’s Web-based ERP application, was done in December 2004, the implementation was carried out in June 2005, and the ERP went live in April 2006. “There was no readily available ERP product for transportation business processes, so we zeroed in on a third-party Web-based ERP package for the express cargo industry which we customized to our needs. This took us almost a year.” A long legacy of operating in the organized sector of road freight had given PRL seasoned business processes which necessitated customization of available software.

According to Kamat, the decision to go in for a Web-based application was driven by PRL’s distributed set-up, with a complex route network and branches located all over the country. “For any organization, having information at the right time is very important. In the case of the transportation industry, the thumb rule is that along with the shipment, information too has to move from one place to another,” Murthy added.

Continued Kamat, “In a client-server setup, consolidating information so that it became available the moment the consignment reached its destination was very difficult. There was a lot of dependence on manual intervention in terms of consolidating and transferring the data into the central server. With a Web-based ERP, information is consolidated and centralized at one place and immediately accessible online to the concerned parties.”

POBC is using HOPsuite as its ERP, which went live in January 2003. Explained Kamat, “HOP stands for House of Patels; the suite represents all the applications that we have developed. HOPsuite Version 4.0 was the client/server version while HOPsuite Version 5.0 will be Web-based and will go live in June 2007. Eventually, both PRLWEBXpress and HOPsuite Version 5.0 will be integrated at the top so that the management information system is consolidated.”

The PRLWEBXpress implementation has Operations Module at its core, surrounded by Accounting, Clients, Sales and Fleet Management modules. “There are other functions like Human Resources and Administration, which, though not a part of the current ERP setup, will be integrated subsequently,” Kamat informed.

The applications have standardized on the Windows platform, on the OS as well as database fronts, while messaging has been standardized on Linux. WEBXpress is on the ASP platform, HOPsuite Version 4.0 is on VB 6.0, and HOPsuite 5.0 on ASP.net.

IT spends

Currently, both applications are hosted on centralized servers located at the outsourced Internet Data Center (IDC) in Mumbai. The company has also outsourced the total hardware maintenance to provide maximum uptime at optimum cost. However, the total management of the applications is handled in-house and the source code is with the IT department. Procedures have been laid down so that the IT department can deal with issues like Internet downtime. On the anvil is a Disaster Recovery (DR) center. “We will be setting up a DR site, either in Chennai or Delhi,” Kamat said.

Kamat pointed out that 75 percent of the IT spend has been on hardware. “Since we were going in for a Web-based application, we had to upgrade all our hardware. Having a large ground network we had to provide hardware at the locations. We also had to finance the hardware at our business partner and franchisee-end.” he explained.

The second-highest spend was on connectivity. Explained Kamat, “Our locational setup is categorized into two—booking or delivery branch and trans-shipment hubs. The parameter used for connectivity is vehicular movements that are highest in the transhipment hubs and generate huge volumes of data. Our 23 transhipment hubs across the country are therefore connected to the central server with leased lines, including RF-based leased lines.” Since vehicular movements at the level of branch and below are lower, Kamat has opted for broadband, and in the case of really far-flung branches, dial-ups because the software has been designed to support both. A total of 250 locations are wired up with the central server.

As for security Kamat said, “We have installed intrusion prevention systems. We have a firewall set up at the IDC level to protect the servers. The next step is to implement Virtual Private Networks (VPN). We would like to put the access of MIS on VPN because it is a secure way of accessing and reporting.”

A lot of attention is also being given to getting users comfortable with the new setup. Stated Kamat, “We have designed such user friendly screens that the user needs to be trained only once on the software.”

Cashing in

Following the ERP implementation, there has been significant reduction in billing cycle time, which has brought down total outstanding dues. “Earlier, because of delayed data and proof of delivery (POD) availability, the branches were not able to bill customers on time. With an integrated centralized application, I can have all the PODs uploaded at a single point. These can be quickly downloaded by the branches, so bills can be generated and submitted to the customers,” Kamat explained.

Murthy pointed out that there is also the option of scanning the PODs and uploading them on the central server. “Instead of waiting for the physical PODs, branches can download the scanned ones, print them out, and attach them to the bill for submission to the customer. As a result, the billing cycle has been drastically reduced from three months to 45 days,”

According Kamat, it is too early to document the gains since the IT integration process is still on. Other notable gains include reduction in pre-printed stationery costs as most of the hitherto physical document-generating activity is online.

Kamat said the key factor for success in any major IT roll-out is the support of top management. “Unless the user supports the technology, the technology doesn’t carry any value, and the management has to develop the user. We are fortunate that our Vice-chairman, Ariff Patel, is personally involved in the project.”

PILL is evaluating peripheral technologies such as RFID (Radio Frequency Identification) and barcode to automate and strengthen operational processes. At the macro level, it is evaluating BI tools to help the management analyze information and service the customer better. Other key projects in the pipeline include integrating a Vehicle Tracking System with Web-based ERP. Declared Kamat, “At PILL, technology is here to stay. We have only started laying the foundation.”