Presentation by

Devendra 43

Supriya 47

Snigdha 19

Arvind 27

Parikshit 16

Field W ork of ERP Field W ork of ERP Im plem entation ProcessIm plem entation Process

IntroductionIntroductionTata Ryerson is a 50:50 joint venture between Tata Steel and Ryerson Tull of the US which manufactures hot and cold-rolled coils, strips, plates, sheets and blanks.

Head quartered in Kolkata

Manufacturing facilities in : Jamshedpur, pune

Distribution points: Howrah, Pune, Jamshedpur, Faridabad, Chennai, Raipur and Bangalore.

Plans to open 50 new sales offices by 2006.

The company went live with SAP in 1997.

ERP HistoryERP History

SAP provides:SAP provides:

νν Inventory and stockyard m anagem ent Inventory and stockyard m anagem ent

νν Sm all lot deliveries Sm all lot deliveries

νν Just In Tim e supplies.Just In Tim e supplies.

Tata Ryerson has upgraded its ERP package Tata Ryerson has upgraded its ERP package twice in the past seven years as a result the twice in the past seven years as a result the com pany has grown from 10 com pany has grown from 10 crorecrore in 1999 to in 1999 to 335 335 crorecrore in 2004 and its transaction has in 2004 and its transaction has doubled in the past 2 years.doubled in the past 2 years.

SAP: The Package of choiceSAP: The Package of choice

νν Tata Ryerson undertook a evaluation Tata Ryerson undertook a evaluation exercise to select on R/3 3.0 F version.exercise to select on R/3 3.0 F version.

νν The core package had sales and The core package had sales and distribution, m aterials distribution, m aterials m anagem ent,finance,production planning m anagem ent,finance,production planning and application link enabling m odules.and application link enabling m odules.

νν It had well developed queries, reports and It had well developed queries, reports and graphical presentation of data.graphical presentation of data.

The need for localizationThe need for localization

νν Tata Ryerson upgraded from Sap R/3 3.0F Tata Ryerson upgraded from Sap R/3 3.0F to R/3 4.0 Bto R/3 4.0 B

νν 3.0 version lacked localization feature such 3.0 version lacked localization feature such as excise reporting and enhanced sales as excise reporting and enhanced sales tax feature suited to Indian m arket.tax feature suited to Indian m arket.

νν 4.0 version enabled to sm oothly integrate 4.0 version enabled to sm oothly integrate Tata Steel’s SAP and Tata Ryerson’s ERP.Tata Steel’s SAP and Tata Ryerson’s ERP.

Evident ResultsEvident Results

νν Tata Ryerson added substantial value to Tata Ryerson added substantial value to m aterials supplied by Tata Steel before it is m aterials supplied by Tata Steel before it is dispatched to the custom er.dispatched to the custom er.

νν R/3 4.0 Version helped to share inform ation R/3 4.0 Version helped to share inform ation about the m aterials and custom ers online.about the m aterials and custom ers online.

νν It also enables sharing of all docum ents from It also enables sharing of all docum ents from Tata Steel’s SAP system which accom pany Tata Steel’s SAP system which accom pany the m aterial when it is shipped.the m aterial when it is shipped.

Enterprise UpgradeEnterprise Upgrade

νν Product support was no longer available Product support was no longer available for 4.0 version.for 4.0 version.

νν Transactions volum e were doubling year Transactions volum e were doubling year on year.on year.

νν Change of com plete hardware Change of com plete hardware infrastructure to handle large scale infrastructure to handle large scale transactions.transactions.

Hence they decided to adopt SAP R/3 4.7 Hence they decided to adopt SAP R/3 4.7 Version.Version.

Handling the BlackoutHandling the Blackout

νν Before going live with 4.7 version the Before going live with 4.7 version the entire application and developm ental entire application and developm ental server had to be shut down for 48 hours.server had to be shut down for 48 hours.

νν During this period the com pany had to During this period the com pany had to ensure that the system is up and running ensure that the system is up and running and is not affecting the business.and is not affecting the business.

Business GainsBusiness Gains

The Quantitative goals of the com pany were The Quantitative goals of the com pany were achieved withachieved with

νν Increased efficiency of business processesIncreased efficiency of business processes

νν Im proved productivityIm proved productivity

νν Reduced CostsReduced Costs

νν Optim ized work flowOptim ized work flow

νν Reduction in errorsReduction in errors

νν Transaction speed was accelerated m any fold Transaction speed was accelerated m any fold because of availability of real tim e inform ationbecause of availability of real tim e inform ation

Business Gains (Contd.)Business Gains (Contd.)

νν Custom ers could query the quantity of Custom ers could query the quantity of m aterial available at a particular tim e and m aterial available at a particular tim e and plan their production and scheduling plan their production and scheduling flexibly.flexibly.

νν Com pany could change the production Com pany could change the production cycle as per custom er requirem ents at any cycle as per custom er requirem ents at any given tim e which translated into im proved given tim e which translated into im proved custom er service and quality control.custom er service and quality control.

Future RolloutsFuture Rollouts

νν Tata Ryerson is planning to bring into the ERP Tata Ryerson is planning to bring into the ERP system its 10 newly opened offices.system its 10 newly opened offices.

νν It intends to im plem ent the Hum an resource and It intends to im plem ent the Hum an resource and Payroll m odules of ERP package and looking for Payroll m odules of ERP package and looking for an appropriate partner.an appropriate partner.

νν Also they m ight consider the CRM and SCM Also they m ight consider the CRM and SCM packagespackages

νν Incase VAT com es into picture this version Incase VAT com es into picture this version would need to m ake only m inor changes to the would need to m ake only m inor changes to the existing excise m odule.existing excise m odule.

Rs 3,47,50,000Rs 3,47,50,000COSTCOST

TataTata Technologies, PuneTechnologies, PuneIMPLEMENTATION PARTNERIMPLEMENTATION PARTNER

Oracle 9iOracle 9iDATABASEDATABASE

W indows 2000W indows 2000OPERATING SYSTEM OPERATING SYSTEM

SAP R/3 3.0 F upgraded to R/3 4.0 B and SAP R/3 3.0 F upgraded to R/3 4.0 B and later to R/3 4.7later to R/3 4.7

SOFTW ARESOFTW ARE

Production Server: HP ML570 with Production Server: HP ML570 with Pentium IIIPentium III

Developm ent Server: HP DL 380Developm ent Server: HP DL 380

HARDW AREHARDW ARE

Steel: hot and cold rolled Steel: hot and cold rolled steel coils,strips,plates and steel coils,strips,plates and sheetssheets

INDUSTRYINDUSTRY

IT INFRASTRUCTURE AT TATA RYERSON

QuestionnaireQuestionnaire1.1. Which ERP solution are you using?Which ERP solution are you using?

SAP R3 4.7 versionSAP R3 4.7 version

2.2. When do you started using this ERP system?When do you started using this ERP system?19971997

3.3. What made you think to go for ERP solution (need for ERP What made you think to go for ERP solution (need for ERP solution)?solution)?

νν For better inventory and stock managementFor better inventory and stock managementνν To differentiate itself through product and service qualityTo differentiate itself through product and service qualityνν Integrate various units throughout the countryIntegrate various units throughout the countryνν Lack of real time information resulted in inefficient managementLack of real time information resulted in inefficient management of of

working capitalworking capital

4.4. Are you using readymade ERP or custom build ERP? Are you using readymade ERP or custom build ERP? Ready madeReady made

5.5. Why do you went for readymade or Custom ERP?Why do you went for readymade or Custom ERP?

νν The need for localization such as exercise reporting and The need for localization such as exercise reporting and enhanced sales tax features.enhanced sales tax features.

νν Better integration with Tata steel’s SAP system.Better integration with Tata steel’s SAP system.

6.6. What was the average amount of investment in terms of What was the average amount of investment in terms of hardware, software, networking, consulting and training hardware, software, networking, consulting and training expenses etc?expenses etc?

ERP Package implementation of R/3 3.0 F Version : Rs. 3,00,00ERP Package implementation of R/3 3.0 F Version : Rs. 3,00,00,000,000Upgrade to version R/3 4.0 BUpgrade to version R/3 4.0 B : Rs. 2,50,000: Rs. 2,50,000Upgrade to version R/3 4.7 Upgrade to version R/3 4.7 : Rs. 45,00,000: Rs. 45,00,000Total Total : : RsRs. 3,47,50,000. 3,47,50,000

7.7. How long the implementation duration of this work was?How long the implementation duration of this work was?8 Months8 Months

8.8. Was there any cost overrun and time overrun for ERP module Was there any cost overrun and time overrun for ERP module and why (if any)?and why (if any)?NoNo

9.9. What are the problems faced during implementation? What What are the problems faced during implementation? What were the change management issues?were the change management issues?

νν Handling of black out for 48 hours.Handling of black out for 48 hours.νν Training for employees.Training for employees.

10.10. Was there any retrenchment of employees, if yes, in how Was there any retrenchment of employees, if yes, in how many numbers?many numbers?NoNo

11.11. Business Process Reengineering was done before ERP Business Process Reengineering was done before ERP implementation or it was done as per ERP package?implementation or it was done as per ERP package?

νν BPR led ERP implementation.BPR led ERP implementation.

12.12. What are the benefits received by the organization after ERP What are the benefits received by the organization after ERP implementation?implementation?

νν Company growth from Rs 10 Company growth from Rs 10 crorecrore in 1999 to Rs 335 in 1999 to Rs 335 crorecrore in in 2004.2004.

νν Its transaction has doubled in the last 2 years.Its transaction has doubled in the last 2 years.νν Increases efficiency of business processesIncreases efficiency of business processesνν Improved productivity Improved productivity νν Reduced costs Reduced costs νν Optimized workflowOptimized workflowνν Reduction in errors Reduction in errors νν Availability of real time information accelerated transaction spAvailability of real time information accelerated transaction speed.eed.νν Flexible production and scheduling plans Flexible production and scheduling plans νν Change in production cycles as per customer requirements at any Change in production cycles as per customer requirements at any

given point has improves customer service and quality control.given point has improves customer service and quality control.

13.13. What is the technology platform used for What is the technology platform used for this system?this system?

νν Hardware: The production server is a HP ML570 Hardware: The production server is a HP ML570 with a Pentium III Xeon processor, a 240 GB with a Pentium III Xeon processor, a 240 GB hard disk and 2.4 GB of memory.hard disk and 2.4 GB of memory.

νν Operating System : Windows 2000Operating System : Windows 2000νν Database :Database : Oracle 9iOracle 9iνν Implementation Partner : Tata Technologies. Implementation Partner : Tata Technologies.

Nestle SANestle SAAn ERP odysseyAn ERP odyssey

HistoryHistory

νν Nestle SA is a Switzerland based consum er goods giant that Nestle SA is a Switzerland based consum er goods giant that wanted to use SAP system to help in centralize 200 com panies wanted to use SAP system to help in centralize 200 com panies and subsidiaries in 80 countries.and subsidiaries in 80 countries.

ν It had signed a m uch publicized $200 m illion contract with SAP and an additional$80 m illion for consulting and m aintenance— to install an ERP system for its global enterprise.

ERP OdysseyERP Odyssey

•Nestlé's global SAP project, which is tied in to a larger $500 million hardware and software data center rehaul, will be integrated with its American subsidiary's soon-to-be completed ERP.

• In 1997, Nestle USA, the Glendale, Calif.-based company embarked on an SAP project code-named Best .

• Best took 6 years for implementation completion and cost around $200 million. The last rollouts were in the first quarter of 2003.

• To date the Best project has saved the company $325 million.

The Problems faced by Nestle The Problems faced by Nestle USAUSA

• Angr y employees

• E xpens ive r eengineer ing

• L ong per iods of w ait ing

• R es is t ance t o change

The Problem:The Problem:29 Brands of Vanilla29 Brands of Vanilla

• Before 1991, Nes tlé was s imply a collection of independently operating brands , such as S touffer 's and Carnation, owned by the S wis s -based parent. I n 1991, the brands were unified and reorganized into Nes tlé US A.

• Divis ions s til l had geographically dispersed headquarter s and were free to make their own bus ines s decis ions

• T he new company was trying to introduce economies of scale and common practices , but years of autonomous operation proved an almos t insurmountable hurdle.

• Among many other troubling redundancies , that Nes tlé US A's brands were paying 29 different pr ices for vanil la—to the same vendor

• T he reason was because every divis ion and every factory got to name vanil la whatever they wanted to. S o one could call it 1234, and it might have a whole specification behind it, and I t might be called 7778 by somebody else. T here was no way of compar ison.

• T he solution was to have a common sys tem acros s the Nes tle empire which would create savings through group buying power and facil itate data shar ing between subs idiar ies .

The Proposal: The Proposal: One NestlOne Nestléé, , Under SAPUnder SAP

One Nes tlé reflects the goal of trans forming the separate brands into one highly integrated company

The Trouble:• Nes tle US A uses nine different general ledgers and 28 points of cus tomer entry

• I t had multiple purchas ing sys tems with no record of how much volume it was doing with a par ticular vendor because every factory set up their own vendor mas ter s and purchased on their own.

• T here was need for bus ines s Process Reengineer ing to change the way of doing bus ines s .

T he S olut ion pr opos ed:

• Recommendation for S AP Package

• Maj or changes in the next 3 to 5 years in bus ines s processes .

• By October 1997, a team of 50 top bus ines s executives and 10 senior I T profes s ionals had been as sembled to implement the S AP proj ect.

• T he team's goal was to come up with a set of bes t practices that would become common work procedures for every Nes tlé divis ion. All the divis ional functions—manufactur ing, purchas ing, accounting and sales—would have to give up their old approaches and accept the new pan-Nes tléway.

• T he S AP sys tem would be cus tomized around the uniform bus ines s proces s es .

• By March 1998 the key s takeholders had a plan in place. Nes tlé would implement five S AP modules—purchas ing, financials , sales and dis tr ibution, accounts payable and accounts receivable—and the Manugis tics ' supply chain module.

The Solution Im plem entation

Development work began in July in 1998.

• T he deadline for four modules was Y2K.T he new sys tems would have to double as code fixes and be in place for the millennial change

• Nes tlé US A made the deadline. But its has te created almos t as many problems as it solved.

The Process:The Process: NestlNestléé's Crunch's Crunch• Even before three of the S AP and the Manugis ticsmodules were rolled out in late 1999, there was rebell ion in the ranks .

• Employee res is tance because none of the groups that were going to be directly affected by the new processes and sys tems were represented on the key s takeholders team.

• Dunn(CI O) says , " We were always surpr is ing [the heads of sales and the divis ions ] because we would br ing something up to the executive s teer ing committee that they weren't pr ivy to." Dunn calls that her near fatal mis take.

• By the beginning of 2000, the rollout had collapsed into chaos . Not only did worker s not unders tand how to use the new sys tem, they didn't even unders tand the new processes . And the divis ional executives , who were j us t as confused as their employees— and even angr ier—didn't go out of their way to help.

• Nobody wanted to learn the new way of doing things . Morale tumbled.

• T urnover among the employees who forecas t demand for Nes tlé products reached 77 percent; the planners s imply were loath or unable to abandon their familiar spreadsheets for the complex models of Manugis tics .

• A technical problem soon emerged as well. I n the rush to beat the Y2K deadline, the Bes t proj ect team had over looked the integration points between the modules .

• I n its has te to unify the company's separate brands , the proj ect team had es s entially replaced divis ional s i los with process s i los .

• I n June 2000 the proj ect was halted. T he company removed Marc Richender fer as proj ect coleader and gave Dunn full respons ibil ity.

• I n October 2000, Dunn gathered 19 Nes tlé US A key s takeholders and bus ines s executives for a three-day offs ite at the DoubleT ree Hotel in Pasadena, Calif., about 10 miles from Nes tléheadquar ter s .

• T he offs ite group members eventually decided that to finish the proj ect they would need to begin at the beginning, s tar ting with the bus ines s requirements then reaching an end date, rather than trying to fit the proj ect into a mold shaped by a predetermined end date.

• T hey also concluded they had to do a better j ob of making sure that they had suppor t from key divis ional heads and that all the employees knew exactly what changes were taking place, when,

why and how.

The Rem edy:

Lessons learntLessons learnt

νν No m ajor software im plem entation is about No m ajor software im plem entation is about software. Its about change m anagem ent.software. Its about change m anagem ent.

νν Shortcuts in ERP im plem entation is shortest route to Shortcuts in ERP im plem entation is shortest route to unem ploym ent.unem ploym ent.

νν Moving to SAP is about challenging the principles Moving to SAP is about challenging the principles and belief of the em ployees and the way things and belief of the em ployees and the way things have been done till now ,hence its very risky.have been done till now ,hence its very risky.

The End Game:The End Game:Sadder But WiserSadder But Wiser• By Apr i l 2001, the end-s tate des ign was complete, giving the proj ect team a highly detailed road map to follow.

• A month later , T om James came on board as director of process change for the Bes t proj ect, having the sole respons ibil ity of acting as a l iaison between the divis ions and the proj ect team. James says that he was shocked by the s ti l l poor relationship between the divis ions and the proj ect team.

• Nes tlé US A's proj ect has achieved s ignificant ROI , with the larges t chunk of savings from better demand forecas ting.

• T he Bes t proj ect has saved $325 mil l ion ti l l date.