Vardhman Group Puts ERP Network Cloud In Place

Mumbai: | Updated: Dec 26 2002, 05:30am hrs
Chandigarh-based Vardhman Group, the $320 million entity whose business portfolio includes textiles and steel, decided to go in for an extensive connectivity program for its steel business to ensure seamless integration and connectivity of all operations. One of the direct benefits has been the overall reduction in inventory levels and customer satisfaction, according to company officials. Customer orders can now be tracked from the shop floor to warehouses along with shipping details and the gains have been the detailed information on order status, stock levels at various locations, logistics details, need based production planning and budgeting.

A key customer has been provided connectivity to the integrated package so far. He can now obtain details of despatches from the mill, orders pending execution, statement of accounts and invoice re-printing on his desktop. The mode of connectivity to the customer is VPN with firewall protection and password security.

We undertook this implementation with a view towards standardisation of systems, improvement in customer service and reduction in inventories, says Vardhman Group executive director Sachit Jain.

The groups textile business spans cotton, blended & synthetic grey and dyed yarns, grey and processed fabrics, sewing and industrial threads and acrylic fibre and the conglomerate is the largest producer and exporter of yarns in India with a presence in markets like US, EU and Japan.

The Vardhman Network Cloud as the companys corporate general manager - IT and project manager ZS Chaudhari refers to it, has been spread over manufacturing units and branches at various geographical locations. Altogether 13 manufacturing units and 12 branches are connected through its Wide Area Network (WAN) set-up. Most of these locations are connected with the centralised server through VSAT, ISDN, Leased line and at a few places through PSTN (Dial-up) connectivity.

The implementation involves distributors and currently it has been provided to two distributors (fabric business). We have had trials to test the connectivity to distributors and in the near future we will provide this facility to more distributors. We are using the VPN technology. Proper firewall protection and secured password access, says Mr Chaudhari.

As part of its IT strategy, the group had constituted a task force for evolving an IT road map which concluded that it needed an integrated package solution. Vardhman decided to go with IBM for its ERP implementation project.

In the selection phase, the task force evaluated alternative solutions and decided in favour of a solution based on Unix and OS/400. The group moved from an Oracle platform to IBMs iSeries platform running OS400 as the operating system with DB2 as the relational database management system. Textile Integrated Manufacturing (TIM) from Datatex Ltd, Israel and Business Planning and Control System (BPCS) Financial of SSA GT, USA were the two ERP solutions finalised for the groups needs.

IBM completed implementation of the ERP solution at all the seven divisions comprising the head office, a purchase division and five branch offices - of VSGM (Vardhman Spinning and General Mills Ltd) in a period of seven months.

The group operates in some of the most competitive segments of the textile market requiring stringent service norms and its critical success factors include effective production planning, tight inventory control, control over order-to-shipment cycle, logistics management and supporting financial analysis tools providing real-time information, say group officials. During the ERP implementation, IBM India developed interfaces to suit the local customisation modules for both excise and exports.

The Implementation Process
The TIM implementation started with definition of the parameters including terminology, procedures, transactions and the data format creating a master reference document. The Management Accounting Information System (MAIS) was implemented to ensure that all products, materials and operational process details concerning spinning, weaving, printing, dyeing and finishing operations were available. This module enables the company to plan production budgets and product costs. Other modules implemented included Material Advanced Stores Handler to manage warehouse inventory, Supplier Orders System to process purchase orders, Customer Order Processing System to handle all customer related issues like order entry, invoicing and shipping.

An important module was the Dye House Management System (K2Dye) that stores all information on batches as well as the recipes. This module enables dye lot construction and selection of optimal recipes, thereby ensuring physical control of the weighing operation with daily schedules per machine.

The Customer Tracking Facility includes:

* Online Information and Status of Customer Order (COPS) and Production Orders (DISPO)

* Back tracking of material from fabric to yarn and yarn to fibre in case of customer complaints.

* Better customer service through customer order inquiry and production order inquiry and linking of customer order to production order.

Group officials concede that while the legacy systems used across the Vardhman group were taking care of all functionalities, it was business drivers like cross-functional integration, information sharing, access to information anytime and anywhere, more transparency, online status of stocks, despatches, customer orders and production process that led to the implementation of ERP. The ERP implementation involved a network-centric approach that standardised on the software and hardware part (central server).

Says Mr Chaudhari, The first step towards ROI (return on investment) is to recover the recurring cost as early as possible. ERP provides both tangible as well as intangible benefits and we are in the process of documenting them. Some of the benefits of ERP implementation are timely deliveries, reduction in inventories, reduction in manufacturing cycle time and increased asset utilisation.