Case Study

Unichem Labs

 

Mixing Successful Formulations with Baan

The common refrain among Unichem’s work-force in 1997 was "we have lots of computers but no computerization" but now in 2000, the same employees sing a different tune.……the tune of improved productivity, cycle time reduction, higher profitability, lowering costs and integration of customer needs to Unichem’s manufacturing process. In short, avers Mr. P.A.Mody, CMD, Unichem Labs, "Baan is helping us to achieve these and much more". Adds Mr.Suresh Shenoy, Unichem’s go-getting GM-IT and a crucial member of the company think-tank to whom Mr. Mody entrusted the task of restructuring the pharma giant, " In Baan we found the remedy for Unichem’s productivity ills".

 

Asking the right questions?

In 1997, Unichem took a critical look at all its management systems and processes and the top management asked three simple questions; how can we face and win challenges that will Confront us in the next millennium? How can our people spend time productively in value-added activities? And finally how can we make better executive decisions? Says Mr. Mody,

"The answer we got was clear and simple: go for an ERP package and our BPR will be done concurrently". Unichem was then faced with the option of growing its own ERP system or go for a tailor-made package. Says Mr. Shenoy; "We were prepared to pay the opportunity cost of implementing a tailor-made package since it will come with global best practices".

Sooner, Mr. Shenoy and his team swung into action and embarked on a total systems feasibility study and a group comprising various functional chiefs was formed for evaluating different ERP packages. Says Mr. Mody, "In our business, raw materials constitute a major chunk of our pricing hence inventory control is critical followed by cycle time reduction, which will ensure that our products hit the markets rapidly and in a way beat the competition on sheer availability - in short these are the Critical Success Factors for the selection of the ERP package".

The company evaluated vendors like SAP, BPCS, JDE and Ramco (an Indian vendor) apart from Baan and infact Unichem was the first Pharma Company in India to technically evaluate all the packages. Says Mr. Shenoy, "Baan was superior to the other packages because it had a good localization module and probably only Baan supported batch processing which is very critical for our industry". Though Baan never had a pharma customer in India, adds he, "that did not deter us and we found Baan as the best fit and the support commitment shown by Baan actually made us go for it".

 

Implementation Experience

Unichem is a multi-location manufacturing company with plants located across five geographical centers in India, the company also has around 400 distribution centers spread country-wide. Basically Baan was implemented in Unichem’s HQ in Mumbai and its plant in Goa and they adopted the big bang approach with absolutely no parallel runs after implementation. This was a strategic decision taken by the top management of Unichem. Says Mr. Shenoy, "This is the only way we can find out operational issues in the system and also maximize from Baan’s rich functionality".

Unichem’s product mix is quite complex. Formulations contribute to 85 per cent of sales and 15 per cent comes through bulk drugs. Through the years the company’s product portfolio basket has become wider. Right from synthesis, development, manufacturing, marketing and export of bulk drugs, chemical intermediates and formulations both in human and veterinary health –care and in the past two years it has forayed into the fast growing therapeutic segment of cardiac care, psychiatry and gastro-enterology to improve profitability and Lower DPCO coverage. Says Mr. Shenoy; "Our manufacturing and service activities are both in the ETO and MTS business environments." Shenoy and his team developed a functional road-map at the start of the implementation and used Baan extensively in areas like; Manufacturing, Distribution (inbound and outbound logistics), Finance, Statutory Requirements, Y2K Compliance and pharma specific features. Says Mr. Kaushal Mehta, Consultant, ISC, Unichem’s implementing partner,"this is one of the most complex Baan implementation project yet. Baan 1V b2 was implemented according to the comprehensive Baan target methodology for finance, process and distribution functions and we also implemented the quality control module of Baan in conformity with the schedule U requirements of the Indian pharma sector".

The project involves implementation of Baan process, distribution along with quality control module and finance and the entire implementation covering the Mumbai and the Goa sites was completed in record nine months. The information exchange between both the sites is on Baan Exchange. Says Mr. Shenoy, "the implementation was smooth and we solved the twin challenges of data migration and user acceptance successfully". Adds he, "we also customized around 100 reports in the finance, distribution and manufacturing modules".

Unichem even had clearly thought-out goals of inter-departmental benefits to be achieved on implementation, they are;

  • Reduced Raw Materials, PM and Finished Goods inventory
  • Substantial reduction in manufacturing cost
  • Product manufacturing lead time to quicken
  • Good floor space utilization.
 

How is Unichem benefiting from Baan?

1. The primary objective for implementing Baan, is to develop a strong decision support system at Unichem, where there were operating in "various islands" of legacy systems like cobol, dbase, clipper, FoxPro and other proprietary based software. Says Mr. Shenoy; "Traditional software applications are reactive while Baan delivers proactive information in real time". At Unichem, besides rudimentary outputs like sales tax summaries, Profit & Loss statements, cheque printing etc, Baan will provide Unichem real time financial and non-financial yardsticks like quality performance, regulations, customer satisfaction and profitability.

2. The next important benefit is integrating customer needs directly with Unichem’s manufacturing process enhancing customer satisfaction in the process. Says Mr. Mody; "this will result in cycle time reduction which is a major competitive advantage in the pharma business". In short, Baan will help Unichem to accelerate its growth rates.

3. In the pharma industry raw materials constitute a major chunk of its pricing hence inventory control is extremely critical. Says Mr. Shenoy, "Since going live on Baan we are seeing discernible reduction in raw material and finished goods inventory and we will surely able to tell percentage changes in a years time". Increasing inventory turns will enable Unichem to utilise its scarce floor space in their factory effectively and the product manufacturing lead-time also reduces considerably.

4. Other indirect benefit Unichem is getting by implementing Baan is;

  1. Effective redeployment of personnel
  2. Ability to handle faster growth and expansion
  3. Enjoy the benefits of BPR by default
  4. Reduce duplication and inefficient activities at the shopfloor
  5. Implementation of global ERP software like Baan transforms Unichem from an Indian organization to a world class company utilizing best business practices.
 

Rollout Plans

Things have really perked up since Baan went online. Besides Mumbai and Goa, Unichem has started rolling out Baan in its other two plants in Ghaziabad (near Delhi) and Baddi (Himachal Pradesh). Says Mr. Modi, " we have learnt to walk with ERP now we need to run and make it work for us". Basically all the functional heads at Unichem are self-sufficient interms of database and in mid 2000 the company plans to go for connectivity. Adds he, "the next big leap is going to be DSS" since multi-division, multi-location and multi-product situation requires advanced coordination and information flow.

 

Unichem Laboratories – A Snapshot Profile

For over half a century, Unichem has been constantly widening the horizons of qualitative health care with a commitment to excellence. Through the years, the company has grown to play a key role in the pharma industry in India with a wide spectrum of activities i.e. synthesis, development, manufacturing, marketing and export of bulk drugs, chemical intermediates and formulations, serving the needs of both human and veterinary health-care.Unichem’s multipurpose production facilities in Goa, Baddi, Ghaziabad and Roha apply state-of-the-art technologies in the manufacture of formulations, bulk drugs and Intermediates. The company with a 1998-99 sales turnover of Rs 166 Crores (USD 40

Million) has been consistently growing at around 20-25 per cent annually for the last ten years.

 

Customer Details

Name of the Customer: Unichem Labs
Sites where Baan is implemented: Mumbai, Goa, Ghaziabad and Baddi
Latest Sales Turnover: 1998-99 – Rs 166 Crores (USD 40 M)
Number of Employees: Approx. – 1500 employees
 

System Details

Baan Software Used: Baan 1V b2 – process, distribution, finance and quality control modules
Status: Live Customer – went online in nine months
Multisite: Yes – three or more sites
LOB: Pharmaceuticals
Business Environment: Process
Database: Baanbase
Operating System: Unix
Hardware: IBM
Implementing Partner: ISC Consultancy Services
 

For More Information Contact –
Suresh Vaidyanathan,

Marketing Communications,Baan India – Mumbai

Email: svaidyan@baan.com