Application Apparel Date:   Tuesday , February 01, 2005 Neeraj P Singh was confronting a real challenge; after a long stint with the ERP system in HLL—a FMCG giant, he was moving to a new company: Madura Garments. Madura, Rs 400 crore apparel giant, then was using COBOL and Singh knew he was stepping backwards in career. But the risk he wanted to take personally was just that. Instrumental in implementing Mfg/Pro in HLL’s Pune division, Neeraj P Singh came forward up to take up the Corporate IT responsibility at Madura Garments in 1999. He knew that he was making a move from an ERP environment to a legacy environment—that is from an ERP environment to COBOL environment that was certainly a step backwards. But clearly, he believed in his leadership and technical skills, along with people management, that pronounced in aligning a distributed heterogeneous system at Madura. While the IT systems in the company’s warehouses were running on Cobol, in the factory it was using Visual Fox Pro. In the corporate headquarters and the financial department it was another system: Ingres. Quite obviously these isolated legacy systems didn’t talk to each other. Every month, the IT and the finance team spent considerable amount of time in consolidating data from disparate systems. It was easier said than done. And worse was the impending obsolescence of these systems. There were issues of duplication of data. For instance, the sales data with the finance, corporate headquarters and warehouses did not tally. Hence, reconciliation of data was a big challenge. Sometimes this meant sitting for long hours. There were many instances when purchase orders were raised from the warehouses. However, the factory manager would not have received the data. This would lead to delay in the supply of fabric there by affecting the production. “Implementation of ERP would facilitate transparency in information flow,” says Singh. Singh drew up a detailed strategy to assess the needs of the organization, and to evaluate the right technology solutions for Madura Garments. Everyone understood that IT would play a key role in meeting the business objective of Madura Garment. “We carried out a Business Process Reengineering (BPR) with PriceWaterCoopers (PwC). At the end of the study, the management at Madura Garments had decided to go in for an ERP deployment. This saw a need for single homogenous environment replacing distributed heterogeneous environment,” he says. “We prepared a checklist of key performance indicators as well key areas of that function. Focus was on process rather than functions. We then identified 35 vendors and short listed SAP. If the customization of the ERP package comes to maximum of 20 percent the package is a success. That is a thumb rule. In our case, it came to close match,” says Singh. AT that time, there was no company in India, which had deployed Apparel and Footware Solution (AFS) of SAP. Singh takes pride in saying that Madura Garments took the bold step. “It was a risky tool. But we had confidence. Generally the implementation partners do SAP implementation. I insisted that my implementation team would be a joint team with PwC and SAP,” he says. At the end of every phase of implementation, Singh made sure that an international expert in AFS would carry out a quality audit before proceeding to the next phase. It’s closing time at Madura Garment’s flagship retail store: Planet Fashion, which showcases the best of Van Heusen, Louis Philippe, Allen Solly and SF jeans, and the storeowner is collating all the sales that happened on that day. The consolidated data is transmitted over the Internet to Madura Garment’s headquarters in Bangalore. The Point-of-Sale system at each of 100 showrooms is interfaced with backend system at Bangalore, where daily sales of each showroom get stored on the SQL server and then gets pushed into company’s ERP system—SAP. The next morning, all-India sales data is available to Madura’s management. Through the billing data various parameters get captured—brand, size, color, style, and of course even sales. Through this the company draws inferences on consumer preferences and buying pattern. Supposing, chequered-shirts are not being sold in Bangalore then they are not sent to the showrooms. If they were in great demand then the company would replenish it. Replenishing is not just the issue, but replenishing of same style code. And that is done through the Automatic Replenishment System (ARS). Earlier, this was not an issue. For example, if a white shirt was sold from particular showroom, it was replenished with some other shirt in the same colour, but not the same style code. Today everything is decided over a system in just a single IT house. Imagine a time when deciding what to send to the showroom was at least a months job. And because of this latency what was being sent from the central warehouse to the showroom never reached. There were a lot of returns and stocks were just mounting. This meant overhead costs and in turn toppled bottom line. Technology has helped Madura Garments’ partners gain greater visibility of stocks available or what have been ordered. Eleven agents and 22 distributors now book and track orders through a web-based system. When a distributor or agent logs in into the online system, he is able to see the available stock details. Based on the available stock, the distributor can punch orders by entering colour, style, size and quantity required. This can track whether his order is awaiting confirmation, confirmed, dispatched or cancelled. Based on dispatch date, he will know when the goods arrive from the central warehouse in Bangalore. Orders were captured from across India that was tightly integrated to backend system. Issue of purchase order, delivery confirmations in electronic format has not only reduced costs, but also reduced delivery time. The order fulfillment rate has also increased from 65 to 90 percent. In early days annual sales and merchandise plan was scattered. The company has just begun using SAP’s Advanced Planning and Optimization (APO) tool. The sales and merchandise plan can be tracked at various levels—company, brand, product style code, channel, and customer. “There is top down as well as bottom up approach; both the figures should tie-up,” says Singh. He expects the forecast accuracy to improve to 85 from the current 70 percent. “The system has statistical forecasting tools based on past sales. Based on buying patterns and seasonality factors the tool has been customized. “At the end of the month, we can see how close or far each sales person was to the estimate. Once visibility is there, we can take corrective action,” he says. Now, Singh has gone a step ahead and implemented tools to measure secondary (what distributors sell to their retailers) and tertiary sales (retailers selling to end customer). Every week, all the information is pushed into business intelligence tools (data mining & warehousing) to generate reports on weekly basis. “Here we can clearly see a distributors performance. Is he gaining or loosing? What is he investing back in the business? This insight is shared with him so he can plan out his stock for next month,” says Singh. If you look at the efficiencies we have gained and converted them to value terms, we have already got return for the Rs 9 crore investment on SAP. Singh today operates on Rs 6 crore annual IT budget. The future of the garment business depends on real-time information and reducing inventory level and efficient coordination, which can be possible through a more robust IT architecture, says N P Singh, Vice President, IT & e-Commerce, Madura Garments, a division of Indian Rayon and Industries.