Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY

ERP IMPLEMENTATION IN FOOD AND BEVERAGE INDUSTRY

GROUP: 4

BY

NAME
RAHUL DAWAR SIDDHESH TRIVEDI ADITI MEHTA HARBIR SINGH KULKARNI NACHIKET

ROLL NO.
156 171 208 302 311

ORGANISATION SLECTED
PEPSICO UB Groups AMUL NESTLE USA DABUR INDIA LTD.

Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY

INDEX TOPIC

PG.

Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY

ERP IMPLEMENTATION AT PEPSICO PepsiCo, Inc. has chosen SAP to offer the primary company foundation to unite functions, standardize procedures and increase performance across its partitions. The selection of MySAP Business Package will offer PepsiCo with a common computer foundation to successfully incorporate company procedures across its business. PepsiCo connects the growing number of customer products and food and drink companies that have implemented SAP alternatives to obtain functional quality and aggressive benefits. As one of the globe's biggest practical food and drink companies, PepsiCo makes, marketplaces and marketplaces international manufacturers such as Frito-Lay treats, Pepsi-Cola liquids, Gatorade sports liquids, Tropicana liquids and Quaker foods. To achieve highest possible managing advantage from its mixed companies, the company desired a company alternatives company that would provide common business exposure and functions while conference the industry-specific needs of its different partitions. With MYSAP Business Package, PepsiCo will be able to improve submission and shipping, improve planning and predicting, increase information visibility and link supply string and stock with customer-facing actions in a single, incorporated process. PepsiCo will apply a wide range of alternatives from mySAP Business Package, operated by the SAP NetWeaver incorporation and application foundation. The execution of the new system is over a multiyear period of time for PepsiCo. Specific plans for prioritization and sequencing are under way. The adopting of a common technological advancement foundation is a considerable step in the continuous modification of our business, which will drive advantages and efficiency of our several managing partitions and collection of international manufacturers, said Indra K. Nooyi, chief executive and primary financial specialist, PepsiCo. SAP is a well-respected company to customer items organizations and provides us incorporated technological advancement and market experience to lower our cost of technological advancement possession and obtain our objectives for development and business performance. PepsiCo & PEPSI Bottling Group (PBG) choose MEDSTAT Advantages package to deal with personnel benefits. This is a multiple year certified software provides PepsiCo & PBG with a DSS & confirming programs for proactively handling personal & business health in order to increase efficiency & earnings. The MEDSTAT DSS incorporate all of their information into a single, main resource

Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY UTILISATION BENEFITS Leverage current SNP optimization and implementation One Up Group already founded and trained Met the greater part of requirements Core incorporation into SAP ERP Main Component Future interface expectations Positive aspects in improving SAP Leverage conventional architecture Require little adjustment of primary objects Provide user-friendly GUI Delivers many adviser efficiency advantages that had been on the person wish record for years

The control of pepsico was in a fix: In order to integrate the new take a position alone programs. Wait for their current program upgradation according to their specifications. The control at Pepsico decided to go with the first alternative

The control was diminishing between ideal & ideal choices. Strategic In this the whole system have to go through bpr (business re-process engineering) which creates a remarkable obstacle for the organization & the results cannot be expected. Tactical It is more adjustable. It is recognized to increase temporary benefits, reduce risk, fast roi. The ideal technique is what the organization implemented for. IMPLEMENTATION PHASES PepsiCo utilized the following high-level phases Requirements Evaluation Specification Build / Unit Test Integration / Acceptance Test

Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY

SUPPLY CHAIN MANAGEMENT (SCM) SYSTEM Pepsico keeps in mind that all its suppliers (Water , Food colorings ,corn syrup, plastics and carbonation etc.) come into the suitable plant to keep consumers satisfied and to avoid shortages. Excess inventory is avoided which blocks the important resources & cash flows. Pepsico implemented MYSAP Business Suite applications which helps in better communication with the suppliers as well as adequate forecasting results. Sap helps in calibrating their supply chains from a traditional supply chain to an adaptive supply chain network.

CUSTOMER RELATIONSHIP MANAGEMENT Managing relationships with customers Customer satisfaction and dealing with consumers effectively and efficiently ERP captures & integrates customer data from the complete organization, analyzes the data & gives results throughout the enterprise

Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY SAMNA PROJECT At the field sales staff level, access to SAMNA is provided through SFA Handheld device . Salesmen receive information on available stock levels at distributor points, receivables scheme/promotions being carried out by Pepsico, proposed order at outlets, order fulfillment . data and targets on the Handheld device. They in turn use the Handheld to electronically capture orders, collections and sales returns and exchanges on the handheld. The detailed captured in the handheld device are then transferred through GPRS synchronisation.

WHY SAP?? PepsiCo Inc. chose SAP's full MySAP Business Package to increase its submission and shipping procedures, to be well prepared and be able to forecast, and give better exposure to its worldwide supply chain. PepsiCo, which makes and distributes Frito-Lay , Pepsi-Cola drinks, Gatorade sports beverage, Tropicana juices and Quaker oats, is trying to better link its supply chain as well as stocking

Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY information with the client data. STRATEGIC FIT Making one level more sensitive allows the other levels to focus on being more effective. While talking about Pepsis provide string functionality, it was told that Soft drink tends to be more sensitive in places & a bit less in areas. Multiple drinks kind results in a larger product collection producing the unit to modify its techniques accordingly, thus fine adjusting the provide string for each form of drink.

SOFTWARE COSTS Immediate cost of materials & services used in creating or acquiring programs. Compensation & related benefits for workers who are immediately associated with the application venture. Interest costs received while creating internal-use programs. PepsiCo is a big win for SAP because some of PepsiCo's subsidiaries were already using Oracle for ERP techniques, as well as PeopleSoft and Siebel systems.

CONCLUSIONS PepsiCo was probably fed up with Oracle's lack of ability to perform on the incorporation of Pepsi's different programs propagate across its subsidiaries. It's one of the better techniques when information, program and procedure incorporation with other non-SAP programs and directories is a problem. Companies are looking to SAP to dislodge different techniques, give geographical places realtime procedure exposure and eliminate procedure redundancies. IMPROVEMENTS Professional assistance program : ability to carefully observe sales or business. Decision Support : decreases cost of raw materials & resources. Packaging Application Expert (PAX): performs generation & logistical procedures.

Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY Transaction handling program : preserves 30-50 thousand man hours regular. Management reporting: enhanced product quality, less waste & gives profit-vision BEFORE ERP

AFTER ERP

Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY

ANALYSIS: UB Groups About UB Groups United Spirits Limited (USL) is the largest spirits company in the world by volume, selling 114 million cases for the fiscal ending March 2011. Besides Whyte & Mackay and Bouvet Ladubay being 100% subsidiaries of USL, the company has 21 millionaire brands (selling more than a million cases a year) in its portfolio and enjoys a strong 59% market share for its first line brands in India. USL has a global footprint with exports to over 37 countries. It has a sizeable presence in India with distilleries and sales offices all across the country, and a committed team of over 7500 people dedicated to the fulfillment of the company's mission. It has established manufacturing and bottling plants in every state of India. In addition, to deliver its products to customers located anywhere in India, USL has established a robust distribution network covering the whole country. With growing size and acquisitions, the IT infrastructure at UB Group has also grown both in size and complexity. To keep the push on the accelerator of growth, IT Managers realized that a unified application infrastructure with flexibility to adapt to frequent changes in business conditions was of the highest importance to align IT with business at UB. The new IT infrastructure should allow integration of existing legacy applications and seamless addition of new applications to the IT infrastructure. Problem Faced Need for ERP UB Group deploys a wide range of software and hardware products to sustenance its IT requirements. Most applications are deployed on one of three IBM i-Series, with various operating systems such as OS/400, 64 bit Linux and Windows supporting almost all its platform requirements. Enteprise software contains SAP with approximately 400 users, Websphere Portals, Lotus Notes, Click View for data analytics, databases like DB2 and SQL servers alongside with a range of java based applications to support different requirements and business processes. They have IT spread across 80 locations connected using MPLS, VSATs, and Leased Lines. With a growing number of processes without any cohesive centralized management, distributed information in various locations and servers it was becoming increasingly challenging for the IT department at UB to deliver important and timely information to Management to take effective decisions and manage business processes across diverse domains. Data stored in the SAP systems was not obtainable as intelligent information to senior management. An unchanging and efficient web services framework was essential.

Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY More over critical 24x7 processes needed automation to meet industry demands. Application collaboration across the enterprise comprising the partner network was required to provide integrated and structured information; good data quality and unlocking storage tower of data was the pressing need to move forward and fast. Solution - ERP The Fiorano Solution was grounded on Fiorano SOA Platform. It is a SOA based middleware platform that permits application integration based on open standards like JMS, Web Services, JMX and host of JCA based adapters and bridges. The core of the platform is the Fiorano ESB which performs as the integration backbone. Fiorano Choreography Tools offer visual based process creation, deployment and execution from the same point. Other supporting tools like deployment manager and Service and Security manager offer the much needed security and management. Among the various process that UB Group deployed using Fiorano, SAP integration was one of the key solutions that facilitated it save over a million dollars in a short span of time. Figure -1 below represents Fiorano's SAP Solution at a high level. The information in SAP can be pulled out and sent to the report generating tools using Fiorano SOA Platform without doing a single line of ABAP programming. This protected UB a significant amount in consulting costs of a SAP consultant who would usually be required for such a job; it also reduced software costs as now the Fiorano SAP adapter was able to flawlessly connect to SAP using just a single client license. The figure below displays one such flow where UB used Fiorano to pull out the information from SAP and send it to reporting tools.

FIGURE 1: SAP Integration

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY Along with the ease of integration significant amount of time is also saved in crafting and deploying flows on Fiorano. Fiorano's advanced event-driven architecture allows the logical business process to be directly mapped to the physical implementation layer facilitating business users to directly work with Fiorano tools. The event process created using Fiorano Orchestration Tool directly deploys the required queues and topics for data exchange and in only needs modest configuration which can be done by business users without much IT intervention. Fiorano SOA platform also provides wide-ranging support for web services and related interface that allowed supplier and partner integration with UB. Fiorano pre-built adapters provide the key to enriched interoperability with an extensive variety of applications and technologies. UB was able to automate the complete help-desk for distillery sales and SAP auto forwarding using these pre-built components and services without any coding or custom development.

Benefits Selecting Enterprise integration middleware for UB was a detailed and rigorous process of over 6 months that included a detailed proof-of-concept. After evaluating different solutions on the market. Fiorano came on top on the evaluation criteria selected by UB. Fiorano's key differentiating features for UB were

GUI based Orchestration tool that made it lot easier for people with minute IT knowledge to work with Fiorano. The Orchestration tool itself provided remote deployment with a simple click for easy deployment on remote machine. Fiorano SOA Platform supported multiple platforms (Windows, Linux, UNIX, Solaris) providing the interoperability which allowed easy deployment across the enterprise across disparate environments. The suite of adapters and bridges (File reader/ writer, DB adapters, SAP adapters and many more) provided easy integration with almost all the applications participating in UB's business processes. The distributed nature of the Fiorano ESB, enterprise service bus provided linear scalability. The excellent peer to peer model with buy-as-you need pricing model provided greater ROI.

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY UB uses Fiorano flows to manage and automate all of the above processes. Some examples follow: 1. Receiving Goods (GRN - Goods Received Notes) When suppliers send goods to the manufacturer, a GRN (Goods Received Note) process is executed. The GRN process records all items received from the supplier (this can be a complex and comprehensive list of materials). This list is compared line by line against the original PO placed on the supplier. SAP then determines how much to pay the supplier (after verifying the goods provided by the supplier). At the end of the exercise, the Supplier Account is debited and the Bank Account is credited (within SAP, since SAP is recording how much money was paid to the supplier). At UB, the flow that manages the GRNs is implemented on Fiorano. 2. Dispatch When goods have to be dispatched (say, to distributors), then an Invoice has to be created (since the distributor has to pay for the goods). In SAP, the 'standard' invoicing process takes 5 steps and 9 screens, requiring 12 mins to complete typically. With the Fiorano flow, this changed to 1 step and 2 screens, requiring just 2 mins to complete. That's a savings of over 10 mins on each invoice creation. UB creates over 5000 invoices per month, thereby saving over over 1600 man-hoursper month just on invoice creation alone. Moreover, the new solution allows the central head-office to process the invoices generated by remote factories, without requiring (skilled) people at remote locations from ever having to learn SAP or get trained on SAP. At remote sites, operators simply type in invoice details on an HTML page, and the Fiorano flows that process invoices handle the rest; updating the SAP system seamlessly and executing the 'business process flow". People in the field no longer require SAP training and can now generate invoices accurately and easily on the SAP system. They are transparent to SAP which runs in the background controlled completely by the Fiorano flows. The process is very scalable. When UB's sales went up by over 18% last year, there were able to handle the increased invoicing volume without problems of any kind. 3. Production When complex products are manufactured, several raw materials are consumed as part of the manufacturing proces. For each manufacturing 'run', one has to list what is consumed, what is produced, alter the finished goods list, decrease the raw material quantity and report a variety of parameters including product cost, cost of production, etc. This whole process of tracking what is produced and consumed and reporting information on the production run is called the "Back flush" process within SAP.

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY UB uses Fiorano flows to extract information relating to the Back flush process and to publish this information to the enterprise portal, where it can be reviewed by managers for appropriate actionable decisions. 4. Logistics and integrated approval mechanisms Different distributors have different credit limits within the SAP system. If while picking up goods a distributor's credit limit is exceeded, SAP blocks the transaction until a manger either approves or rejects a request to increase the credit limit. In the traditional approach, the manager had to log into SAP and (assuming he/she knows how to navigate through the maze of SAP menus), manually approve/reject the request. It is not always possible for a manger to log into SAP (for instance, if the approval is required while the Manager is travelling or late at night or if there is no internet access). UB solves this problem by using Fiorano flows to get the approval from a manager using his/her mobile phone. An SMS is sent to the GPRS-enabled cell-phone of the manager, listing a weblink. A Fiorano flow in the mean time extracts the relevant transaction to be approved and places it on the portal. When the manager clicks on the link in the SMS message, he is directed to a portal where he logs in and reviews the transaction, with the ability to approve/reject the transaction over the cell-phone. This obviates the need for the manager to log in physically into the SAP system and shields the manager from all SAP details - important because these details are archaic and difficult to learn. 5. Invoicing detail Besides cutting down processing time from 12 mins/invoice to 2 mins/invoice, the invoicing is integrated with more processes. a. Lifting plan: Each sales person normally provides an estimate of the sales he/she will possibly make over the quarter/year/fixed-term b. Bulk order: This is an estimate of what will be lifted in a larger order The lifting plan and bulk order is compared against the Actual order and a Final invoice is generated. A report of the difference between the Actual order and the Bulk Order or Lifting plan is also created automatically - using Fiorano flows. 6. New Regulations UB implements several Fiorano flows to optimize revenue by responding to new tax regulations. An example is Service Tax. In the normal process, UB outsources several manufacturing tasks to third parties (Contract manufacturers). These CM's sell directly to UBs distributors, collect revenue and then pay UB back its share after deducting their contracted cost. Unfortunately, the

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY payment from the CM back to UB came under the preview of Service Tax. UB implemented a Fiorano process changing its business process to directly sell to the Customer, instead of through the CM while separately paying the CM for its services thereby minimizing the impact of Service Tax. In all of the cases above, the ability of the Fiorano system to rapidly deploy business processes in a fraction of the time it takes to deploy processes on SAP was critical to UB's success. UB estimates that it has already saved over Rs 2.5 crores (US$ 500,000) in Year 1 of operation with a limited set of Fiorano flows. The investment in a Fiorano's modern, real-time, distributed architecture paid off many times over in a short span of under a year. These savings will be multiplied several fold in the coming years. About Fiorano Software Founded in 1995, Silicon Valley based Fiorano is a California Corporation with established leadership in enterprise middleware and peer-to-peer distributed systems. Fiorano's pioneering event-driven, dataflow SOA platform integrates applications and complex technologies into an enterprise nervous system, upsurges business process performance, yields greater message throughput and enhances availability through agent-based visual composition that conduits the capability gap between business models and their implementation - the model is the application, ready to run. Global leaders comprising ABN AMRO, Boeing, British Telecom, Capgemini Telecom, Chicago Mercantile Exchange Group, McKesson, NASA, POSCO Steel, Qwest Communications, Rabobank, Schlumberger, Lockheed Martin, United States Coast Guard and Vodafone have deployed Fiorano to drive innovation through open, standards-based, dataflow SOA applications built in just days, yielding extraordinary productivity.

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY ANALYSIS: AMUL (DAIRY INDUSTRY) 1. ABOUT AMUL Amul is the name dairy cooperative in India, formed in 1946. It is based in Anand, Gujarat. Its managed by an Indian cooperative organisation, Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), jointly owned by 3.03 million milk producers in Gujarat with built network of over 1000 villages (500000 plus members), one of the most successful examples of cooperative organization, transforming lives of Indian villagers. They started the White Revolution which made India the largest producer of milk and milk products in the world. Other than milk its product range includes butter, cheese, chocolates, ice creams and pizzas. (World's largest vegetarian cheese brand) It is the first food company in Asia and one of the 100 companies in the world to receive the HACCP Certification Its annual turnover is if US $2.2 billion (2010-11). Currently they have 3.1 million producer members with milk collection average of 9.10 million litres per day. Apart from India, Amul has entered overseas markets such as Mauritius, UAE, USA, Oman, Bangladesh, Australia, China, Singapore, Hong Kong and a few South African countries. Key persons in Amuls success are Dr Verghese Kurien, former chairman of the GCMMF, Parthi Bhatol, chairman of the Banaskantha Union, was elected chairman of GCMMF. 2. PROBLEMS FACED: NEED FOR ERP Handling large material and information flow directors of GCMMF realised that they were between two extremes the farmers and the customers, both expected the maximum. Customers wanted to have the best quality in the lowest price and the farmers expected maximum amount for his milk. To sustain in the competitive business they had to equally satisfy them both. GCMMF tried to achieve it by educating the farmer and providing him the necessary guidance on one end and on the other end approaching the consumer with the best product and understanding the Indian consumer better. PROBLEMS Large expanse of their operations also was a problem example: logistics Logistics in collection of: o 6 million liters of milk per day o from about 10600 separate Village Cooperative Societies o Approximately 2.1 million milk producing members

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY Logistics in coordination included: o Storing the milk o Processing the milk o Distributing the milk Supplier logistics included: o Weighing the milk o Determination of fat content o Calculation of the purchase price Due to globalization, they started facing strong challenge from international large organized dairies. 3. SOLUTION: ERP To make operations competitive and streamline the collection and production processes, Amul decided to implement ERP System, took major initiatives in this direction in1994. Firstly, they studied existing functions and operations, then formulated an IT plan for growth in the long term perspective. Main focus was on integrating the existing applications redesign/re-organisation of existing software applications. Objective was to allow seamless flow of information throughout enterprise for smooth functioning and decision making process. Also the need to connect its regional and field offices would be served. Large amount of data was required to be handled effectively; any kind of error could lead to large damages. This required integration in the supply and value chain activities, which would give rise to free and fast, flow of information between the different stages, also since they were dealing with perishable goods, delay in information would generate loses. The information technology and total quality management together helped gain control on the procurement, processing and distribution functions. The need for coordinating a highly distributed system was increasing, close coordination became a necessity. They realised they needed a systems revolution, GCMMF is one amongst the first few Indian companies well ahead the time to start a web site opting for the Domain .coop will prove the ERP initiative to integrate the market related activities

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY 4. ERP VENDORS a) ERP vendor Tata Consultancy Services was hired to guide them in its implementation. The implementation project was named as Enterprise-wise Integrated Application System (EIAS) along with GIS. b) Vendor capabilities CS Enterprise Solutions improve o Operational efficiency in turn transforms business o Empowers to organisation to take advantage of emerging opportunities o Optimization of technology and business processes, is ensured Offer deep expertise across the IT alphabet soup: o ERP o CRM o SCM o TMS o ECM and others.

5. IMPLEMENTATION Like any ERP implementation Amul implementation was done in phases. a) Collection procedure: In the first phase Automatic Milk Collection System units (AMCUS) were installed at village societies to automate milk producers logistics. AMCUS was designed to capture member information, milk fat contents, volume collected and amount payable to each member electronically. On an average, around thousand farmers come to sell milk at their local co-operative milk collection centre. Each farmer has been given a plastic card for identification At the milk collection counter, the farmer can just drop the card into a box and the identification number is transmitted to a personal computer attached to the machine.

The milk is then weighed and the fat content of the milk is measured by an electronic fat testing machine. Both these details are recorded in the PC. With reference to these details, the computer calculates the amount to be paid to the farmer (based on fat content). The value of the milk is printed and the slip handed over to farmer who then collects the payment at adjacent window. b) Connectivity: Amul connected to its

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY o Zonal offices o Regional offices o Members dairies Through VSATs for free exchange of information. c) Systems used: The customized ERP- EIAS was implemented across the organization integrating various operational departments. Geographic Information Systems (GIS) was used for business planning and optimization of collection processes. Application software Dairy Information System Kiosk (DISK) was used to facilitate data analysis and decision support in improving milk collection. The kiosk maintained extensive data base on o History of cattle owned by the farmers o Medical history of the cattle o reproductive cycle o History of diseases. Also, information relating to milk production, including best practices inbreeding and rearing cattle was made freely available to farmers which would in the long run help the organization History on milk could be used to forecast milk collection and monitor the produce from individual sellers. d) Future plans: Internet banking services and ATMs which will enable milk societies to credit payments directly to the sellers bank account. Upgrading from plastic cards to smart cards (which could be used to withdraw cash from ATMs) Opted for the.coop domain to position its brand in a different way. Figure below show value chain before the ERP and after ERP implementation. Difference is, the system is better connected with free flow of information between various stages of a value chain.

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY

Before ERP implementation

After ERP implementation

6. RETURNS Radical changes in business processes eliminated middlemen Bought producers closer to the customers. Improved delivery mechanisms Enhanced transparency in operations. Changes: Was able to collect six million litres of milk per day. Reduction in processing time (for effecting payments to the farmers) from a week to couple of minutes. Processed 10 Million payments daily Transactions worth USD 3.78 million. Effectively controlled the movement of 5000 trucks to 200 dairy processing plants twice a day.

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY Online order placements became possible on web. Distributors could place online orders. Overseas agents for distribution were considered. Decision making process became rapid because of availability of real time data. Easy monitoring of crucial management practices like demand versus supply with the help of ERP Amul exports products have reached to be worth around US$ 25 million to countries in West Asia, Africa and USA

CONCLUSION AND FINDINGS ERP implementation has greatly transformed operations of AMUL. Having perishable products they have greatly benefitted from being closer to customer, and better communication throughout the value chain.

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY ANALYSIS: DABUR INDIA LTD. ABOUT DABUR Dabur India Limited is the fourth-largest customer packaged goods corporation in India, contributing a wide array of health care, personal care and food products to consumers in more than 50 countries. Dabur is also the worlds largest manufacturer of Ayurvedic drugs, which are based on an early Indian system of health care, and endorse natural and holistic living. The company reported 2007 revenues of more than US$543 million. Occupational encounter Consumer packaged goods corporations function in a worldwide market that is highly competitive and commoditized. Such organizations need to act smartly, quickly and make wise decisions. Dabur is no exception. Identifying these challenges, Dabur set out to overtake its competitors in terms of revenue and profitability growth. To build a competitive edge, the company asked Accenture to help recognize precise chances that would lead to short-range advantage and longstanding progress. Accenture was well suited for the task. In addition to its highly respected business consulting skills and deep industry insights, Accenture brought a solid understanding of what companies need to do to achieve high performance in the consumer products sector. Challenges Faced by Dabur: Selling and Distribution was one of the major problems faced by Dabur. Availability of the products to meet the customers demand in a quick and an efficient manner was the main problem. The companys network since 2000 had grown rapidly, spanning 29 factories, 6 mother warehouses, 47 stocking points, 4 zonal offices and over 10,000 stockists and dealers. With about a 100 trucks that were being dispatched on a daily basis. A proper distribution of goods with appropriate quantity and quality needs to be dispatched at the given place at a given time across the country. In order to meet the timely and quick responsive demand, it is important for the organizations to adapt to the modern era technology. Also, Dabur faced problems with their product lifecycle management. The new goods and services were typically of smaller lifespans and an emphasis on product addition was required through the expansion into newer products. It was a tedious task to understand the demand and needs of the customers. Dabur Company did demand forecasting within with little association with the organisations customers. Sometimes, the information was not even shared with the shareholders eg: the price promotion that was done by the marketing department was without proper knowledge of the inventory capabilities. Role of Accenture Accenture suggested that Dabur improve its supply chain management, sales and distribution competences and use IT as a planned enabler for its corporate strategy.

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY A two branched strategy from Accenture included: 1. Movement to a quicker subcontracting model that would produce worth through agility and support corporate initiatives 2. Maintaining its SAP enterprise resource planning (ERP) system. Dabur basically implemented 2 ERP systems: a. A QAD ERP suite known as MFG/PRO to manage the outbound logistics b. BaaN to manage the manufacturing logistics. It helps create deliverable processes in the outbound logistics and flawlessly mix it with premeditated inventory managing, credit control and sales generation.

Key Stakeholders in ERP implementation: Management Employee Customers Suppliers External users

Advantage Dabur There was improvement in the sales dispatch to the Carrying Forward Agent (CFA). In an FMCG sector, the foremost portion of sales happens at the end of the month. Therefore they encountered a number of glitches owing to the absolute volume of the dealings and no structure to keep a trail of all these. Problems like cheque bouncing were occurring due to pushed sales that were done to meet the target sales. ERP helped them to get rid of all these malfunctions in their supply chain to make them into a more moneymaking association. Improvement in collections. Thus it helped them reduce their bad debts. Promotional activities are an integral part of an FMCG sector. ERP plays an important role in monitoring these activities. Availability of real time information such as the sales and the inventory at the dealer end helped them in proper demand forecasting of their products and thus avoiding excessive

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY inventory and reducing the storage costs. The improvement in area-wise and brand-wise inventory management has scaled up the entire supply chain management through better sales forecasts, production scheduling, materials planning, vendor management and raw material sourcing.

Conclusion DABUR made a very right move to change into the existing ERP system. It helped them a lot in increasing the organizations profitability since its implementation in 2006

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY

ANALYSIS: NESTLE USA

Introduction

At first glance, Enterprise Resource Planning (ERP) systems seem to be the silver bullet for every companys problems. In one fell swoop, implementation of an ERP system offers a company the chance to re-engineer business processes, coordinate the systems of geographically dispersed locations, consolidate data, and empower users by giving them access to all the companys data in real time. Of course, the opportunities come at a high price in terms of financial cost, implementation nightmares, and human issues. Often these implementations fail miserably as they run behind schedule and over budget; other times they are successful. Regardless of the outcome, each ERP implementation holds valuable lessons to be learned for companies considering their own ERP implementation.

MODULE IMPLEMENTED: SAP ERP R/3

SAP R/3 was officially launched on 6 July 1992. It was renamed SAP ERP and later again renamed ECC (ERP Central Component). SAP came to dominate the large business applications market over the next 10 years. SAP ECC 5.0 ERP is the successor of SAP R/3 4.70. The newest version of the suite is SAP ECC 6.0 SAP R/3 was arranged into distinct functional modules, covering the typical functions in place in an organization. The most widely used modules were Financials and Controlling (FICO), Human Resources (HR), Materials Management (MM), Sales & Distribution (SD), and Production Planning (PP) Each module handled specific business tasks on its own, but was linked to the others where applicable. For instance, an invoice from the billing transaction of Sales & Distribution would pass through to accounting, where it will appear in accounts receivable and cost of goods sold.

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY The Business Case for an ERP

Nestle USA is the $8.1 billion U.S. subsidiary of Nestle SA. In 1997, Nestle USA began its own ERP project known as Best (Business Excellence through Systems Technology). Scheduled to run over the course of six years ending in the first quarter of 2003, this project was budgeted at well over $200 million and would implement five SAP modules: > Purchasing > Financials > Sales and distribution > Accounts payable > Accounts receivable

PROBLEMS FACED: Need for ERP in Nestle

The goal behind this ERP implementation was unification. Additionally, the project would solve Nestle USAs Y2K woes. In the case of Nestle USA, the ERP was part of the vision Nestle USA Chairman and CEO Joe Weller referred to as One Nestle that would be responsible for transforming the separate brands into one highly integrated company.

Prior to the implementation, Nestle USA had nine different general ledgers and 28 points of customer entry. The goal of the ERP project was to bring these numbers down to one. In 1997, a team examining the various systems across the company found, among many other troubling redundancies, that Nestle USAs brands were paying 29 different prices for vanilla to the same vendor. This situation arose from the fact that each factory negotiated their own deals with the vendor and the vendor adjusted the price per factory based on what they thought the factory would pay. The situation was only worsened by the fact that each factory referred to vanilla in a different way this made it nearly impossible for individuals at the corporate headquarters to do comparisons across plants to see manufacturing costs. The goals behind ERP implementations there was a driving goal to consolidate the operations of the different locations so that Nestle could truly leverage their size and buying power. Additionally, there was a need to centralize and control data so that the financial, reporting, and forecasting numbers were more consistent and accurate. As each factory acted as an autonomous unit, Nestle was at a severe competitive disadvantage and realized that it needed one system used by all in order to be more efficient and survive in the global economy.

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Implementation Strategy

The term ERP implementation has become synonymous with nightmare in recent years. High profile failures dot the headlines and companies are often intimidated not only by the high price but also the negative effect implementations can have on their business. The first takes many years and costs loads, the second meets big resistance. Project leaders with prior ERP implementation experience will tell you that there are several pitfalls to avoid during ERP projects. First is not to select an ERP package based on a demo. Choose your package wisely, ask questions, get references, and do your homework. Second is get management commitment. Not securing top management buy-in results in an automatic project failure. Third is to avoid heavy customization. Excessive customization will lengthen the project timeline and by driving up maintenance costs in the future. Finally to avoid in ERP implementations is not to underestimate the importance of training. Users need in-depth and on-going training and should even be involved with system testing if at all possible.

ANALYSIS: Problems in Implementation

Unfortunately for Nestle USA, they did not heed the failures of others. Throughout the implementation, Nestle USA made several large mistakes that almost doomed the project. When the project began a team of 50 top executives and 10 senior IT professionals was assembled to develop a set of best practices for all Nestle USA divisions. The goal was to develop these best practices for all functions of the organization. Each function from manufacturing to sales would eventually be forced to retire their old approaches and adopt the new best practice that had been developed. Concurrently, a technical team was charged with the task of implementing a common data structure across the company. By the time the implementation began in 1999 Nestle already had problems with its employees acceptance of the system. Most of the resistance met by the project team was traced back to the fact that none of the groups that were going to be directly affected by the new processes and systems were represented on the key stakeholders team. By early 2000, the implementation had turned into a disaster. Employees did not understand how to use the new system and did not understand the new work processes they were being forced to adopt. Divisional executives were just as confused as their employees as they had been left out of

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY the planning and development of the new system and were less than willing to assist in straightening out the mess that had developed. The result of this was that morale plummeted and turnover skyrocketed to 77percent. Technical difficulties began to emerge as well during the rollout. In the rush to beat the Y2K deadline the project team had overlooked the integration points between the modules. This meant that the different modules could not talk to each other. So if a salesperson gave a discount to a customer and entered it in the system, the accounts receivable portion of the system did not know of the discount. The result was that the customer would pay their bill but invoice appeared as though it were only partially paid. By June 2000, Nestle USA was forced to halt the rollout and the project manager was removed from the project and reassigned to Switzerland. A director of process change was hired to act as a liaison between the project team and the different functional divisions. With all of these items finally resolved, the project was able to continue. The last rollouts were scheduled to be completed in the first quarter of 2003.

Results: Advantages of ERP implementation

Although there were bumps in the road for Nestle USAs ERP implementation, it certainly seems to be paying for itself. As of 2002, Nestle USA claimed they had already realized a savings of over $325 million. Most of these savings came in the area of supply chain improvements, specifically demand forecasting. With SAP in place, common databases and business processes lead to more trustworthy demand forecasts for the various Nestle products. Furthermore, because all of Nestle USA is using the same data, Nestle can forecast down to the distribution center level.

In addition to saving money, Nestle USA has also been able to come together as one organization. The problem of 29 different brands of vanilla has been solved and now with common databases each factory refers to vanilla in the same manner. They also use common processes that simplify operating procedures and allow for the centralization of functions such as developing training procedures. Training no longer needs to be customized for each factory. Since each location follows the same procedures, training materials only need to be developed once. Additionally, any Nestle USA employee could relocate to another factory and not have to adjust to local processes.

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Group 4: ERP IMPLEMENTATION INFOOD AND BEVERAGE INDUSTRY Recommendations

The Nestle USA case is an excellent case study for ERP implementations because it contains both successes and failures. There were obviously breakdowns during the planning phases of the project yet the overall result can be considered successful due to the consolidated system they now have in place and the amount of money that they are saving due to the ERP rollout. By examining the experiences of Nestle USA other companies can learn valuable lessons that can be applied to their own rollouts. > The first lesson is that in order for an ERP implementation to be successful the right individuals need to be involved in the process from the beginning. It is simply impossible to redesign work processes without involving some of the people that actually do the work. > Secondly an ERP implementation is not the project that companies should attempt to force into a specific timeline. > Third recommendation for companies considering an ERP implementation is to place a large focus on training. Training is one of the key elements of any ERP implementation because without it employees that will be using the system and the new business processes on a day-today basis will not be prepared to do so. > Fourth, organizations should spend time evaluating the business process re-engineering that will be done in conjunction with an ERP implementation. > The fifth general recommendation for ERP projects is to limit the number of customizations that are done to the system. As the number of customizations requested increase so does the cost, timeline, and likelihood of bugs in the system.

> The final recommendation for ERP implementations is to obtain universal buy-in for the project i.e. everyones acceptance in the organisation.

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REFERENCES
PEPSICO http://www.computerweekly.com/feature/PepsiCo-drops-Oracle-to-take-SAP-challenge http://www.foodproductiondaily.com/Processing/PepsiCo-installs-business-platform-tounify-operations http://www.sap.com/corporate-en/press.epx?pressID=2847 http://en.sap.info/pepsico-selects-sap-to-optimize-operations/3742

UB Groups

http://www.expresscomputeronline.com http://www.cxotoday.com

AMUL http://www.amul.com/ http://www.tcs.com/resources/brochures/Pages/ERPSolutionsforRetail.aspx

DABUR INDIA LTD. www.Dabur.com http://en.wikipedia.org/wiki/Dabur

NESTLE USA http://www.foodproductiondaily.com/Processing www.nestle.in

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