The Role Of ERP In Changing Business Competency
Girish Rao, Head IT, Marico Limited | Wednesday, 14 May 2014, 06:42 IST
Based in Mumbai and founded in 1987, Marico (BSE: 531642) (NSE: MARICO) is a leading consumer products & services companies in the global beauty and wellness space. The company has a current market cap of Rs.13, 201 Crores.
Today most of the Fast Moving Consumer Goods (FMCG) companies need to alliance their information base that has been amassed from unique sources. As FMCG companies have operations spanning world-wide, the foremost problem is data integration. To overcome this, the companies deploy ERP solutions that integrate and automate the business processes, promote common practices, share data across the organization, and provides real-time access to information. Implementing ERP solutions has also led to an improvement in the service levels of these companies in relation to their dealers, through the redressal of potential stock-out situations. This has also been made possible due to better visibility of sales, inventory and production in progress data. Hence ERP solutions are coined to deliver the information requirement of FMCG companies. We at Marico deployed the ERP solutions long back in 2001 when we were facing challenges such as amalgamation of subsystems that combine all facets of the business, including planning, logistics & manufacturing, marketing & sales to ensure higher efficiency and quicker response time to customer demands & inquiries.
Before implementing ERP, we leveraged only the Supply Chain Management (SCM) solution that gave rise to numerous tribulations such as severe change in sales & distribution, poor visibility of transaction system, excess stock or stock-outs, weak coordination between the company & distributors and logistics issues. As a result, the operational efficiency of the company reduced to a large extent. Therefore, Marico implemented ERP solution in order to keep online information about their manufacturing plants, distribution points, distributors and retailers which lead to an increase in operational efficiency. Unlike other management information system, ERP systems are very complicated to implement. ERP system evaluation, vendor selection, ERP consultant, implementation plan and execution are the secret sauces for implementing a successful ERP.
The Biggest Challenge: Selecting the Best Fit
Presently, there is huge number of ERP solutions either based on magnitude or business of organizations and vendors in the market, thus making the selection of suitable ERP solution or vendor one of the foremost problems faced by the CIOs of any FMCG company. Most of the ERP vendors deliver their solutions that do not acknowledge the specific need of the clients and forcefully try to fit the solutions to their client’s requirement which results in loss of confidence of clients. ERP vendors should be transparent and open about the things, which they do not or cannot provide in their solutions. Long term vision for the product, stability as well as the quality of the products and time taken to install and implement the ERP, customization of ERP and ownership cost are some of the key constraints for selection of ERP vendors.
In past, people have implemented ERP, but the usage was quite less compared to the expenses made making it a costly affair. To overcome this, Marico formed a layered structure enterprise where each and every end user has three level of support within the enterprise that ensures the rigor in terms of implementation as well as usage of the ERP system. Marico has over managed and over resourced the ERP team to certify that ERP system does not get diluted after it went live. Among other obstacles, having right IT infrastructure has been cited as the major barrier. Marico had owned the entire IT-back bone at least six months in advance to perform load testing as well as quality testing of the infrastructure to ensure that nothing fails when it actually move towards the production system. Marico's core team constantly monitors the global market and other organizations to track & adopt the new technologies and as a result of this, it always stands up-to-date with latest technologies. Among various new technologies, our team selects the most relevant one that can map the needs of Marico.
The development of ERP system had moved forward from last several decades through constant interaction between changing business requirements, technological & organizational maturity, and capability of FMCG companies. Marico is looking forward to intend extended ERP solution with leading edge of technologies or leveraging technologies such as Enterprise Mobility, Cloud, Big Data Analytics, or SAP ERP solution and we are also planning to build and obtain these peculiar competencies directly from the market. (As told to Trisha Pragya)