Manufacturing: Manufacturing IT Success

By : |August 30, 2005 0

IT consumption
in the manufacturing industry has shown a turnaround since last year and the
impetus continued unabated in 2004-05. Obviously, it could not match the
whopping 40% growth achieved last year, but even FY 2004-05 witnessed a
reasonable 22% growth. Pegged at Rs 3,969 crore, manufacturing accounted for
nearly 10% of the domestic IT market; that makes it, along with BFSI, telecom
and government the four pillars that propped up the domestic IT industry in
2004-05. Improving supply chain efficiencies, trimming time to market with PLM,
and reducing inventories were on the palette of most large manufacturers during
the year.

Perhaps the
maximum IT deployment in manufacturing happened in enterprise applications. ERP
was the most common implementation, with SAP seemingly developing a large fan
following among most companies. This was followed by supply chain
automation-more and more SCM solutions were deployed and integrated with ERP
while e-sourcing or e-procurement too grew both in volumes and revenues.
Obviously, the time involved in designing was a crucial component of the
manufacturing cycle time-large scale deployment of PLM/PDM solutions definitely
helped here. Last but not the least, RFID finally made its entry into manufacturing,
immediately having an impact in improving inventory management.

Product Life Cycles
was recorded in both discrete as well as process manufacturing-many discrete
manufacturing companies eyed exports to boost their toplines. These export-oriented
companies supplied automotive components and machinery to global OEMs. Faster
time-to-market and reduced product lifecycles were putting pressure on discrete
manufacturers to connect with the product development and manufacturing
processes of global OEMs. Enterprise applications have helped discrete
manufacturers plan, monitor and rapidly develop components for the export

Investments in
PLM solutions helped manufacturers reduce product design cycle time by enabling
collaboration in real-time. PLM brought about a complete transformation in some
heavy manufacturing outfits such as Larsen and Toubro’s LTM Business Unit at
Chennai, BHEL in Hardwar and BEL in Bangalore. The LTM business manufactures
heavy engineering equipment used for tyre manufacturing, and exports its products
to Italy, Argentina, Brazil, Spain, Syria and Britain. With the adoption of a
PLM solution called Wrench, the company has been able to reduce its design
cycle time and introduce variations in its designs in real-time. BEL Bangalore
has been able to reduce the average time for approving engineering designs from
40 days to just six. The approval time for a change request or proposal for
drawing has shrunk from 60 days to 20. The other value of a PLM solution for
BEL was that requests for printing documents and drawings are now made online.

The upsurge of
global outsourcing to the Indian auto component industry in FY 2004-05 showed
that overseas buyers are now looking at India for its high-quality design and
production at a lower cost. At the same time, smaller Indian auto component
manufacturers needed to scale up their manufacturing capabilities before they
could procure new business and meet the demands of global OEMs. Both enterprise
applications as well as CAD, CAM and PLM solutions played a significant role in
this process. Enterprise applications have helped discrete manufacturers plan,
monitor and rapidly develop components for the export market.

There are
plenty of instances to bolster this trend: enterprise applications helped
discrete manufacturing companies such as Triveni Turbine to better monitor its
production projects and calculate the cost incurred for new product development
(NPD). The company, which manufactures turbines for the power sector, many of
them for the export market in Indonesia, Pakistan, Bangladesh, Venezuela,
Austria and Britain, was able to analyze the complete execution cost of a
project before it commenced. Discrete manufacturing firms also used CAD-CAM
tools to simulate their product designs and speed up manufacturing.

Engineering used AutoCAD and Wrench to build sample products and present the
same to its customers like Yamaha in Indonesia, Brazil and Italy. Yuken India,
exporting hydraulic pumps and valves to Japan, Taiwan, Britain and Spain, also
leveraged the power of CAD-CAM and trimmed design cycles. With these tools it
was able to analyze customer feedback and field complaint data to build
improvements into its new designs. The company has digitized all its existing
designs, and is now planning to move to 3D design software, namely,
Pro/Engineer from PTC.

Industry Boosts Enterprise Apps
only auto ancillaries and engineering companies, even auto majors like Maruti,
Mahindra, Tata Motors, TVS Motors, Hero Honda and Bajaj Auto have been
extensive adopters of IT. SAP deployment has been one of the most visible
trends-Hero Honda was a SAP star site, Mahindra, one of the world’s largest SAP
implementation on Win NT, and Bajaj Auto, the first full scale implementation
of mySAP in India. The other noticeable trend has been the automation of the
supply chain, a crucial ingredient for not only the auto sector, but most in
manufacturing, since it deals with a myriad of suppliers and dealers and
seamless integration with the ERP. In SCM too SAP led the way with Maruti being
a notable differentiator with its i2 solution.

importantly, nearly each and every manufacturer went for Product Lifecycle
Management (PLM) and Product Development Management (PDM) solutions in
conjunction with tools like IDEA and CATIA-this has substantially reduced the
cycle time and cost involved in design and implementation. Product life cycle
management involved the use of software like CAD, CAM, CAE – used to design
models during the development of products in the manufacturing industry. This
is not IT, but use of IT by mechanical and electrical engineers to design their

Indian vendors
like Geometric divided the opportunity into two areas. The first was in the
area of software development for product life cycle management, global sales of
which were close to $8 bn. The other was on capitalizing on opportunity for
using PLMG software for engineering and design services-an opportunity as big
as $80 bn, about $20 bn of which was identified as suited for outsourcing.
Other than outsourcing, few global manufacturing organizations like Honeywell,
Cummins and GE even set up their captive centers in India, leading to large
scale IT consumption.

Supply Chain
Automation Benefits Procurement
was another trend gradually catching up in the manufacturing sector. It helped
companies reorganize the purchase function and support aggregated buying across
business units with the aid of Internet-based tools or B2C Internet portals.
Being Internet-based, more global suppliers participated compared to the
traditional strategic sourcing process. The cycle time reduction occurred
mostly due to a shortening of time spent negotiating, and expedited information
gathering, and faster communication channels among buyers and sellers. The key
to successfully implementing an e-sourcing initiative was to implement it for
procurement of high-value commodities in a few pilot projects. Once the first
phase was successfully implemented, the RFQs (Request For Quotations) were

Some leading
e-sourcing product vendors to emerge during the year were Ariba, Synise and
India Markets. E-sourcing caught up in India big time during the year with many
successful implementations. For example, Dabur saved Rs 2.5 crore with six
reverse auction deals. Tata Motors saved Rs 22 crore on transactions of Rs 362
crore, while the Kirloskar group saved Rs seven crore through reverse auctions
worth Rs 50 crore. But probably the biggest success story was Crompton
Greaves-it not only saved more than Rs 60 crore through reverse auctions, its
CFO personally admitted that e-sourcing was one of the most important factors
that helped the company from liquidation.

This was also
the year when RFID finally came into the mainstream, particularly amongst
garment manufacturers. Madura Garments deployed RFID across its warehouses.
This was planned for the whole of its sales field force, which operated from A
class cities including all the major metros. The initiative also linked eight
factories on the outskirts of Bangalore, while also linking cities such as Pune
and Bangalore. It initially conducted a pilot with 15,000 RFID tags at one of
its retail outlets in Bangalore. Pantaloon Retail started using an RFID writer
and reader at its factory in Tarapur. The warehouse located on the same premises
is using two readers. RFID scanning through 1000 tags permitted Pantaloon to
update its inventory at one go and also released people who were scanning the

Storage also
got some attention in manufacturing but this was limited to backup devices such
as tape drives and autoloaders. There was no pressing need for networked
storage and many have not even consolidated their storage infrastructure. There
were exceptions, however, with the likes of LG Electronics, L&T Hazira,
Jindal Vijaynagar Steel and Kodak having planned their storage requirements and
moved to networked storage, deploying FC-SANs, business continuity and disaster
recovery solutions. When it comes to server OS, Windows 2000 ruled the roost
followed by Window NT and Windows 2003. Proprietary Unix, Linux and Solaris are
also used by many manufacturers. Jindal Vijaynagar Steel is using Red Hat Linux
Enterprise Version 7.3 for its mail server. The use of Linux has helped it
reduce the incidence of virus attacks.

Key Items on
the Palette

  • There has been large scale deployment of SAP
    across the manufacturing industry, particularly in the auto sector.
  • PLM and PDM implementations showed a substantial
    increase, helping in reducing the manufacturing cycle time and cost
    involved in design and implementation.
  • Supply chain automation was one of the biggest
    contributors to IT deployment-e-sourcing as a trend was a big hit amongst
  • RFID finally came into the mainstream,
    particularly amongst garment manufacturers, as it helped most of them in
    better inventory management.
  • With many MNCs setting up back end design
    centers in India, CAD CAM and other engineering design solutions too proliferated.

Alliances: Some New Trends

  • Ashok Leyland signed a 30-month contract with
    Wipro Infotech for Strategic Cost Reduction. The contract involved
    developing a vision and road map for strategic cost reduction and supplier
    relationship management at Ashok Leyland. The consulting and 01 markets
    division of Wipro Infotech, implementing the project, looked at all
    elements of material costs and is providing consultancy and a technology
    solution where 01 markets dynamic pricing tool engine and cost management
    tools are being used. Ashok Leyland also deployed RFID within its
    assembling centers.
  • LML, India’s second largest
    scooter manufacturer, developed a unique web-based employee portal
    catering to all communication and perks disbursement needs of an employee,
    serving virtually as a one-stop solution. It reduced the lead time for
    decision making, as the decision maker could view the past trend of the
    requester online. Apart from that, the effective implementation of HR
    rules, coupled with a marked increase in operational efficiency due to
    appropriate structuring of processes were some of the other advantages.
  • Laxmi Machine Works (LMW), a textile spinning machinery
    manufacturer managed to ramp up revenues by 20% with Oracle’s E-business
    suite. The deal is being touted as the largest deployment of Oracle in the
    country. The manufacturer is using Oracle Balanced Scorecard, Enterprise
    Asset Management (eAM), Financials, Human Resources Management System
    (HRMS), Manufacturing, Sales, Services and Supply Chain Management.
  • Tata Motors reinforced its e-sourcing
    alliance with Ariba by extending its commitment to Ariba Sourcing Services
    and Ariba QuickSource. Ariba continues to provide Tata Motors with
    sourcing and commodity knowledge along with technology advantages across
    multiple spend categories. Ariba Spend Management has also been an
    important part of Tata Motors’ operations to automate, streamline, and
    provide transparency into the sourcing process. Tata Motors also deployed
    Siebel Automotive-a comprehensive suite of eBusiness applications that
    allowed it to manage, synchronize, and coordinate all customer touch
  • Agro Tech Foods, a Rs 1,262 crore company
    which commands a formidable presence in the domestic edible oils and
    branded foods segment, completed the implementation of a Remote Office
    project-enabling key users to access primary applications from anywhere,
    anytime. Currently, for mobile Web connectivity, Agro Tech has given key
    users Reliance GTran data cards. On connection to the Internet, users are
    provided with a URL to access the Remote Office. Moreover, multiple levels
    of security are achieved through the deployment of Checkpoint Firewall-1
    ActivCard. This Card allows the user to pass through a dynamic password
    mechanism. The dynamic password is each time authenticated with the pass
    through server at the ISP site.


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