Singh is the CIO of the Mumbai-headquarteredN R Agarwal group of industries, one of the largest coated duplex board and newsprint manufacturers in India. The Rs 300 crore group started its activities with a 10 tpd unit manufacturing kraft paper in 1975. Today, its combined manufacturing capacity of coated duplex boards is 130,000 mt per annum and that of newsprint 40,000 mt per annum.

“We have three manufacturing units at Vapi in Gujarat— two duplex paper board manufacturing and one newsprint manufacturing unit. Post-ERP implementation, we have also ventured into writing and printing paper manufacturing,” says Singh.

According to CRIS-INFAC reports, overall demand for paper and paperboards in India is expected to rise by 6-7 percent annually, and cross 8 million tpa by 2010. Currently, the total domestic demand for paper is 7.2 million tonnes while production is 6.7 million tones.

As a key player in this industry, the N R Agarwal group has been experiencing high growth in the past decade. But managing this growth was turning into an issue as the company found that controlling enterprise-wide operations was becoming a challenge.

R N Agarwal, who joined the company in December 1993 as director, and took over as managing director from his father in August 2005, realized that the company couldn’t cope with growth if it continued with the traditional business approach. The group was beset with the problems that plague traditionally-run companies. “Processes were not standardized, there was no clear information on sales. Due to weak material management, the management didn’t have a clear picture about the goods being procured, they didn’t know what the outstandings were, they were not aware of the level of stocks. Inventories ballooned and planning suffered. In the absence of an integrated information system, the management couldn’t take informed and timely decisions,” Singh recalls.

Once the top management became convinced of the need for an enterprise-wide information system, Singh was sounded about taking charge of the project. He agreed, and joined the company in August 2005.

The challenge for Singh was to establish a single integrated information system in the organization, and streamline operations, inventory and production planning. “We needed an online, real-time status of inventory across our plants, and the ability to plan further production to optimize inventory levels,” says Singh. By integrating and streamlining operations across the enterprise, managers could control product quality and also track products up to bundling.

In July 2005 the company started evaluating the various enterprise resource planning (ERP) packages in the market and zeroed in on SAP. An important criterion for selecting SAP was that the solution had built in best practices for mill products.

But Singh’s challenges had just begun. “If one left out the order-entry persons we had, our organization wasn’t very IT-savvy. Putting them on ERP would be like going directly from a bullock cart to an aeroplane,” he smiles.

Rightly sensing that he had a change management problem on hand, Singh decided that training was required. “We had a change management training session at each plant and even the head office. The questions addressed were why the organization was going in for ERP, what it promised, what the benefits to the organization would be. Without employee buy-in, the ERP implementation wouldn’t have succeeded,” he says.

Singh estimates the training program resulted in buy-in from 70 percent of the employees. In the same breath he adds that change management training should be a part of any ERP implementation because it is something that people need to understand very well.

The implementation started in November 2005. “We chose SAP Solutions & Services ECC 5.0, and implemented the finance & controlling, sales & distribution, materials management, production planning, plant maintenance and quality management modules. The project went live on July 1, 2006,” informs Singh.

At present the company is using 50 licenses. The servers are centralized in Mumbai. “We have HP Itanium servers with HP Unix as OS and Oracle as database. We also have SAN storage from HP.The plants are connected to the Mumbai head office through a mix of wireless broadband and VPN,” informs Singh. The total implementation cost was Rs 1.5 crore. In recognition of the quick and well-documented implementation, N R Agarwal won the ‘Best Templated Implementation’ award at the 2006 SAP awards for customer excellence.

Notable Gains

The benefits from the ERP implementation have been several: from the streamlining and standardization of processes to accurate sales order processing and analyses, production scheduling, dispatch, monitoring, credit control, material management, inventory control and quality management.

Singh gives the example of the material approval process. Earlier, the requisition for material would come handwritten from the plants to the head office for approval. The purchase department would get the requisition post-approval and then start the procurement process. Understandably, there would be a 4-5 days gap. Post-ERP, the entire workflow has been automated, and the purchase, stores and user departments have complete visibility of the process.

“What had been a process spread over days has been reduced to 36 hours,” says Singh. With better visibility across the enterprise and availability of online information, inventory management has improved. “There has been a 5 percent reduction in overall inventory,” reveals Singh. Post-ERP implementation, the group has complete control over order processing and credit control information. Order confirmations are instantly updated on-line to the manufacturing scheduling department; this ensures faster scheduling of production. Overdues have also been reduced since ERP enables credit control analysis and strict monitoring.
The use of templates that came with the ERP solution has also helped the company in unexpected ways.

“Earlier, rebates and discounts offered to customers were settled after month-end; post-ERP, this is being done before month-end.Again, earlier, the pricing procedure was based on manual calculation; now we have laid down the permutation combination, and put in place a pricing procedure so that a sales order is released automatically,” says Singh.

Recently, the company started sending SMS and e-mail messages from the ERP system to its dealers regarding dispatches and billing. “The order processing cycle in our industry is very fast. The customer needs information about when the goods will reach them. These messages enable dealers and delivery officers to plan their production and address their printing schedule planning.”

Singh is now planning to implement SAP BW (business warehouse) and CRM/SEM/Balanced Score Card in 2008. “The primary users of CRM will be our 50-odd dealers across the country.” Another project on the horizon is integrating Supervisory Control and Data Acquisition (SCADA) with ERP. “There is a time lag between production and update of data which this integration will resolve. We are looking at revamping the entire SCADA system.”