Transparency is the name of the game

By : |May 21, 2014 0

BANGALORE, INDIA: K. Raheja Corp.( KRC) is a known name in real estate business. The group has pioneered the trend of setting world class facilities to meet the business and leisure needs of modern day living.

The core activity for the group is construction and development. This is achieved with a backward integration with suppliers and contractors. Entire Supply chain involves coordination and communication for achieving smooth business operations. Hence, K Raheja Corp decided to bring business partners on the online collaborative platform to improvise on efficiency in supply chain and thus achieve collaboration.

The project was aimed at bringing major benefits to the techno-commercial aspects of purchasing in terms of better transparency, robustness, consistency and reliability. Here is the journey….

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Challenges faced:

In typical real estate scenario, the number of contractors / suppliers generally depends on the nature and scope of the projects such as type of project (residential or commercial), area under construction, desired finishes, amenities to be provided, etc. A lot of time goes into the coordination with vendors, inventory management and project execution. There are process issues in the overall purchasing framewor as well.

The key challenges faced by the business are mentioned below:

  • Longer procurement cycle
  • Limited transparency in the dealings with the suppliers
  • Offline negotiations for L1 decisions thereby reducing the scope for competitive negotiations
  • No evaluation of buyers’ decision for supplier selection
  • Limited procurement data access for all the procurement groups within the organization
  • Irregular savings calculations in procurement activities

The solution:

Keeping the current process challenges in the existing procurement process in mind, the company was looking for a collaborative platform integrated an online portal, which will help in reducing dependency on manual communication and correspondence with the vendors. They finally decided to implement Supplier Relationship Management Application for the group with a core e-procurement functionality.

The group implemented SAP ERP across business verticals and locations including financial, logistics and human capital management integrated with SAP payroll. The system provides complete scope of managing the the internal operations for the entire group. KRC runs on ECC 6.0 with EHP 6 along with separate BW environment and SAP Netweaver Portal for employee self service.

The company went for SAP SRM 7.0 EHP 2 which was implemented for the first time within the organisation on SAP Netweaver Portal 7.3. This also happened to be the first SAP SRM 7.0 EHP 2 implementation on SAP Netweaver Portal 7.3 in India.

Implementation of e-auction module enabled vendors to participate in online auction. Complete automation of transaction on the portal was done by tight integration with SAP ERP and SAP SRM from purchase requisition till placing order to suppliers, online processing of goods receipt and service confirmations.

A native integration of SAP ERP and SAP SRM led to less maintenance efforts from overall cost optimization perspective as well.

The other sub-modules integrated in the SRM basket are:

  • Supplier Registration for online registration of suppliers and bidders
  • Supplier Collaboration with ECC integration for all PO, GRN, Invoice details and current status and auto exchange of information
  • Forward and Reverse Auctions as the new technology support feature in the procurement process itself.
  • Online Supplier Evaluation involving all the relevant stakeholders to be a part of the feedback arrangement thereby having comprehensive supplier evaluation history

The biggest risk was acceptability and adaptability of the product as a concept in real estate sector. This project was such that it involved outsiders i.e. vendor and suppliers as stakeholders. A good understanding of the benefits, online exchange of information, clear visibility and transparency of the procurement process etc., were being explained to vendors and very good response was received.

Vendors and supplier were also comfortable with the transparency in the overall procurement process as they could see the entire process and results online.

Multiple training sessions were done to make vendors comfortable with the new platform. Also, since the users were the outside organisations, a 24×7 support mechanism was also deployed.

Benefits:

This led to efficiency in the overall procurement process and brought significant benefits at organizational level. The process gave the company a sustained competitive advantage and a significant amount of intangible benefits as well.

The procurement cycle has been reduced by at least 3-4 days and as well as the contract handling time. The implementation has also helped to put a rein on the unmanaged spends. The supplier performance data collection and analysis time has also become easier and hence become less time consuming process.

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