Case Study

Sulzer India Limited

 


Achieving Technology Leadership with Baan

Sulzer India is a classic basket case as to how an ERP should be implemented. They experimented with a homegrown ERP system, learnt their lessons and then went for a packaged ERP like Baan. Labeled by the company insiders as the "30 months experiment", Sulzer’s attempts at in-house development of integrated IT solutions did not progress satisfactorily due to multifarious operational problems.

Says Mr. Subodh Nadkarni, President & CEO, Sulzer India, "My first task was to put an end to the home grown experiment and initiate the packaged ERP evaluation exercise". The reasons are not far to seek; Established in 1989, Sulzer India has been consistently posting 40 per sent CAGRs since inception. But, adds he, "As business grew, so did the complexity, hence our legacy systems just couldn’t keep pace with our growth". Thus started Sulzer’s quest for a complete enterprise solution.

 

Project MIS - 30 Months Experiment

Sulzer India operates in four business groups; Chemtech (Process Engineering), High Pressure Gas & air compressors, Speciality products and Textile machinery. Says Mr.Nadkarni, ‘" There were very few Indian companies directly competing with our product lines. Our competition was mostly imports from global players and our overall market-share in India should be around 60-65 per cent". However, now the local competition is coming up.

Surprisingly, Sulzer’s holding pattern held the key to its IT strategy. In 1989, Sulzer India was a 40:40 JV between the RP Goenka group and the Switzerland based, USD 5 Bio, Fortune 500 giant, Sulzer Corporation. Things were smooth. Sulzer India was posting consistent double-digit CAGRs and more importantly its existing IT structure was holding things together. They had tailor made software like inventory management running in their factory and a datapro, cost accounting system and a purchase department system. In short there were FoxPro-based systems developed in different platforms.

Says Mr. Narasimha Rao, GM-Corporate Services, Sulzer India, "These software could handle only at individual small business levels and certainly couldn’t gear up to growth at all". The upshot: Islands of excellence were created between divisions, lots of inadequate information under one division, duplication of divisional efforts and control & planning function was grossly inefficient. Adds Rao, "It became clear that information was not visible between 1989 and 1995".

Sulzer India’s homegrown experiment took shape in 1995 to precisely take care of the inadequacies thrown up by the legacy systems. A MIS to ERP task force was formed headed by the finance chief and five programmers. Their mandate was company-wide data integration and reduce duplication of efforts by divisions. As they were getting to grips with the integration problem, by 1997 the RPG sold out their stake to Sulzer Corporation giving majority control to the Swiss giant that now hold 80 per cent of the company. Moreover, inorder to inject much-needed funds for its expansion the company also went for an IPO for the remaining 20 per cent.

By the same token the mandate and specs of the home grown MIS-ERP project changed instantly. Says Mr. Rao, "After acquiring majority stake Sulzer Corporation wanted consolidation of accounts with products and division-wise allocations. This was not foreseen in the home grown project". This was also the time when business boomed. The company’s revenues increased 2.5 times between 1995 and 2000 and product lines went up by 25 per cent. As a result, things went out of control; employees were overloaded with both functional requirements and contributing to the MIS project. Says Mr.Nadkarni, "By now we clearly realised that ERP is a specialised business and was not our core competence". Undeterred they took the decision to scrap the 30 months experiment.

The lessons were many; Make dedicated teams for ERP implementation alone and it should not be an add-on function for a user, get a proper balance between speed and compromise of business requirements, and go to the specialists who have global experience in this field. Says Nadkarni, "In a way our home grown experiment changed our mind-set and we appreciated the value a packaged software like Baan would bring to our company processes". Adds Rao, " We understood our IT needs better and knew that the ERP learning curve had shortened thanks to our experiment".

 

The Value of Baan

With invaluable hindsight experience the Sulzer top brass went about evaluating various packaged software like Baan IV, SAP R3, Ramco Marshall, JDE, Glovia MfgPro, etc on precise and defined parameters. The critical evaluation factors were strong local support, good on-line customer references, overall implementation costs and resource requirements, simple implementation methodology and most importantly the software should have excellent functionality to Sulzer India’s business needs.

Says Mr. Nadkarni, "Ours is a typical multi-product and multi-divisional discreet manufacturing set-up and Baan matched most of our requirements and criteria among the packages we evaluated". Adds Mr.Rao, "Baan was more suitable to a manufacturing concern like ours".

Sulzer India operates in a niche compressor market catering to extremely high-pressure applications. The company specialises in compression of all types of gases mainly hazardous gases and also manufactures high-pressure air compressors. Other niche and critical areas the company operates include hydrogen bottling, oxygen compression, helium and defence applications.Sulzer India also provides complete solutions to the process industries with various technologies in distillation,separation, crystallisation , mixing processes.

Says Mr.Nadkarni, "the objectives for Baan were clearly defined. Besides achieving company-wise data integration and reduction of duplicating efforts, Baan should also enable us to make quick decisions, faster response and service to customers and remain successfully ahead of our competition".

 

Implementation Highlights


1. Customisation was controlled at the top and the need never arose.Says Mr.Nadkarni, "The most important decision we took before implementing Baan was we will adapt our processes to the Baan software and will not do any customisation. Infact this was such a critical element in our ERP journey only myself and IT chief could decide on customisation of any sort and no one else". Only a hand few of reports were customised.

2. Handpicked the Users from various functions. Says Mr. Rao, "As a result there was absolutely no resistance and it was a completely "bottoms-up" implementation with complete involvement and value-addition from the users".

3. DEM tool was used extensively and AS IS – TO BE processes were mapped using DEM. Sulzer tested and simulated all the scenarios and almost 22 types of sales order variants were tested.

4. Thanks to the implementing partner - Tata Infotech Limited – the change management was smooth and we adopted the big bang changeover. Says Mr. Rao, "Overall on a ten point scale for excellence I would rate the Baan product at 8 and support at 7 and our implementation as a niner".

5. Used Baan’s service, projects and QMS modules extensively. The complete project inspection specs were set up using the Baan QMS tool. Adds Rao, "Baan’s service module is excellent for manufacturing companies".

 

Benefits using Baan

Sulzer India is in the low volumes but high value-addition business. The company’s stated objective is to add maximum value locally and also use India as a low cost base for exports. Adds Mr. Nadkarni, "Our thrust is to develop products and applications to cater to the local needs and have invested millions in our technology center to further our "global approach" to our customers".

Quality and service is primary to the entire operations of Sulzer. Besides Baan, the company is investing substantially in regional and local service centres, which is one of the key success factors in future.


1.Data integration across various departments and locations in both the plant at Kondapuri and Head Office in Pune.

2.The employee strength has remained the same though sales has increased more than 3 times – More value-add per person handling growth is easy with Baan.

3.Elimination of duplication of efforts and errors both at the plant and HQ

4.Timely and accurate information. Says Nadkarni, "This enables us to address the requirements of our SME customers who sometimes look forward to us for total solutions from designing, process engineering and supplies to the commissioning of plants – a complete turnkey". Accurate on-line availability of information for decision making even at operational levels.

5.Sulzer’s availability to promise and on-line order execution is enhanced. Says Mr. Rao," our business process cycle is anywhere between three to 13 months depending on the size of the order. Baan should help us plan better and reduce this cycle and do more online sales".

6.Product costing are accurate. Sulzer has 14 products and the estimates of the cost of the products are visible with Baan.

7.Less paperwork and overall better efficiency. Ease of reposting into Sulzer corporate and statutory taxation compliance.

Reduction of cross subsidy of divisions and P&L and cash flow statements are now available for strategic planning and control. Says Nadkarni, "With the help of Baan we would be able to have the business performance report of each division for strategic decision making".

 

Future Roadmap

Contrary to the 30 months homegrown experiment Sulzer took just nine months to implement Baan at multi-locations in a big bang approach. Says Mr. Nadkarni, "We are now actively planning to implement supply chain solutions and integration since many of our vendors are overseas. Our roadmap also includes Product Data Management, Supply Chain Scheduler and the HR module". Adds he, "My advice to all the companies evaluating ERP solutions is try to compromise your requirements to suit the package and never tinker with it". Nobody can dispute this statement.

 

Sulzer India Limited
System Details:

Status – Live and Big Bang changeover in Nine months

Software Used – Baan IVC4 (Fin / Distri / Mfg / Service / Projects / QMS)

Implementing Partner – Tata Infotech Ltd

Mode – Multi-Finance and Single Logistics with QMS module

Database – MS Sql 7

Operating System – MS Win NT

Hardware – IBM Netfinity

Multisites – Two sites (HQ in Pune and Plant at Kondapuri)

 

Corporate Details:

Annual Revenues – 1999: Rs . or USD 45 Mio

Line of Business – Projects and Engineering equipment

Business Environment – Discrete Manufacturing and ETO

Product Manufactured – Industrial compressors form 35 per cent of Sulzer’s

total income while process technology products contributes 40 per cent.

 

For More Details Contact :
Suresh Vaidyanathan,
Marketing Communications, Baan India

Email – svaidyan@baan.com