Manufacturing: Godfrey Philips focusing on process change

Godfrey Philips focusing on process change

Alagu Balaraman, executive VP, IT and Corporate Development, Godfrey Phillips

Monday, June 11, 2007

Godfrey Phillips is the second largest player in the Indian cigarette industry with an annual turnover of over $265 mn and is looking at becoming the leader in the global tobacco industry, with innovation. Its products are distributed through an extensive India-wide network comprising 484 exclusive distributors and over 800,000 retail outlets. The company has one of the highest productivity rates of workers in the entire country and technology is one of the focus areas

What are the new technologies that will be deployed by Godfrey Phillips to assist reducing cost and increasing employee productivity?

Can you elaborate on your experience with utilization of technology in the process of tobacco procurement?

Has IT platforms changed the face of the company?

What are your innovative technologies that can ensure better customer experiences?

What are your investment plans for the IT infrastructure?

What are the focus areas?

Your major concerns?

What are your main concerns with bandwidth and efficiency, and what are the solutions?

Godfrey Phillips has an aggressive outsourcing initiative. What are your strategies?

How does the IT function ensure consistent service across all channels-sales/marketing/delivery...?

How do you rate the quality of services provided by telecom service providers. Do they deliver as per service level agreement?

Source: Dataquest
Our experience with telecom service providers has been excellent. Airtel handles our networking end-to-end. There are service level agreements that both parties independently measure and monitor. We meet regularly to review performance and make changes. Contracts have been structured so that payments are linked to performance. We have found our engagement to help in resolving issues, changing and moving with technology and improving our ability to deliver to our users.We do so with our internal governance mechanisms. A committee consisting of all the functional heads of the company meets monthly to review IT, security and other business compliance issues. From the IT perspective, there are agreed metrics for services being delivered that is reported and reviewed in this meeting. Plans and business priorities for IT are discussed and set in this forum.Godfrey Phillips has followed an aggressive outsourcing policy. Starting with basic services in facilities management, it now includes the end-to-end networking, software development and implementation and even requirements definition with our users. We believe that deep technical expertise is needed by the business, but is not always best attempted to be kept in-house. So, a program of identifying partners and building relationships with them has been underway for several years. Currently, in terms of effort, we have probably outsourced about 75% of our work.Bandwidth requirements are steadily mounting. A movement towards centralized, browser-based applications, email spam volumes and multimedia content is fueling this. Unfortunately, we have not been seeing a drop in bandwidth costs on the lines that have happened in mobile telephony and consumer broadband. So, efficient utilization has become critical. The starting point for this is demand monitoring, which we have done for some years, but now we need to understand bandwidth demand by type of demand and not just at an aggregate level. To help with this, we have recently moved to an MPLS based network.My major concerns are related to skill levels in the industry and efficient access to skills. I believe that Indian service providers have a long way to go. The key area is in smooth transition from requirements definition to service delivery. Effective relationship management and project management is a need here. Secondly, there needs to be a systematic program to manage the relationship and drive continuous improvement. In a fast changing environment, service providers who 'fill it, shut it and forget it' are inviting customers to switch.Personally, I believe the focus will be on driving process change and ensuring a resource pipeline for the company. Godfrey Phillips has an IT team with a strength of eleven people working on projects and another ten people who provide support at each physical location. The former focus on process automation, data center management and application management, while the latter are located with users.The next few years will be focused on process change and application delivery; driving improvement on service delivery and building up a credible business continuity plan.Our customers are our distributors. Our first level of activity was to simplify the ordering and order tracking process. Integrating the order booking with payment systems with a centralized tracking of despatches did this. To improve information flow to the customer, we implemented SMS alerts every time a payment is booked and a dispatch is made. Since most of our customers were more comfortable operating their mobile phones than PCs, we made mobile computing for them a thrust area. At the next level, we have provided customers with a facility to query their account balances through their mobile phones. Currently, we are extending facilities for them to simplify their reporting activities by mobile enabling as well. So, using the banking analogy, it will be possible for them to report by fax, website or mobile phone based on their convenience.The last few years have seen a transition from back-end processing to more and more user driven applications that manage processes. IT is being used extensively to drive process change in the company. Finally, users are being given increased access to data for analysis. Yes, IT has changed many things in the company.Tobacco procurement for the cigarette industry is controlled by the Tobacco Board which conducts auctions simultaneously in several auction floors during the season. There is a season in Andhra Pradesh and another in Karnataka. During the auction, each bale is put for bidding and buyers have to make a spot assessment of quality and decide on a price. This places a premium on the buyers' capability to judge the leaf and assess the market demand for it. To help the buyer, we need to consolidate information across different platforms and provide an analysis that shows them market conditions, demand, performance against target and budgets. This is where IT can play a significant role. Currently, most of the processing is being done offline at the end of the day. We are looking to speed up this process by applying handheld-based applications that can talk to back-end servers. This project is still in its development phase.We have been working on creating architecture to mix-and-match functionality specific to our needs. Now, there are domain specific application packages, ERP and custom built systems, all working together. To increase their robustness, we have deployed an enterprise service bus at the back-end and a workflow process manager at the front-end. We have deployed a business intelligence solution to improve consolidated reporting and analysis. All these are from Oracle. Another project underway is the revamping of our portal. The vision document for this project outlines the integration of sophisticated search, and access to content and applications.