' Online integration of our dealer mgmt info has enhanced the response time'

There are rumors that TVS Motors might soon
outsource manufacture of motorcycles. Where does IT files in?

TVS Motors might be outsourcing the
entire two-wheeler manufacturing operations to Indonesia sometimes in 2005,
though the plans are yet to be finalized. However, IT would play a crucial role
in setting up design and quality standards for the manufacturing process and
this would be handled out of India only. The planning and design would involve
implementation of a Product Lifecycle Management (PLM) application. Currently,
we have short-listed three PLM packages from e-Matrix, Windchill and SAP and
once the final choice is made the actual implementation would be done next
fiscal.

Apart from PLM, the other arm of IT support
behind our overseas manufacturing foray is going to be CRM. Plans are afoot to
have a SAP CRM solution in place by 2005 which when initiated would give us
direct access to end user information as well as standardize all the dealers.
However, standardization on a CRM is possible only after a Dealer Management
System (DMS) is in place. From February 15 onwards, we are having a month's
pilot with 35 dealers for the DMS solution, with implementation being done by
Mindtree Consulting. Subsequently, we would have a rollout in May with plans to
cover 450 dealers by December. TVS has a planned budgetary outlay of Rs 12 crore
in 2004 only for these PLM and DMS projects.

TVS might now have big plans on PLM and DMS/CRM
solutions as part of their overall future strategy. But when you started on the
IT route with SAP, what was the role of technology implementation to the
company's overall strategy?

Our real foray into IT started in
mid-2000 with the Project Integrate aimed at not only replacing legacy IT
systems but also integrating applications extended across the enterprise, both
internal and external, suppliers and dealers. Our primary objective was to align
the physical improvements with a sound information systems engine. We decided
that the best and fastest way to put a robust information engine for business
transactions and operations was to go in for a proven ERP package and SAP was
chosen after internal evaluations. TVS was perhaps the first company to
straightaway license the mySAP.com solution and to implement it from scratch.
The idea was to combine routine application implementation and collaboration
with suppliers and customers from the beginning rather than starting with a mere
legacy transformation.

SAP implementation has worked differently
across different enterprises. How did the implementation pan out in TVS Motors?

After choosing L&T Information Technology as an implementation partner
for SAP, we went in for the Big Bang approach-implementing all critical
modules in one shot across the entire company, irrespective of location. Through
the big bang approach, SAP's basic modules were implemented across all
locations - two manufacturing plants at Hosur and Mysore and 27 area and
branch offices across the country. The documentation of the "as-is"
process of what was being practiced was done meticulously before starting the
SAP training. This helped in reducing possible omissions in the mapping
processes for SAP coming to light too late after the implementation. Over 1,200
processes were identified before even looking into SAP. As part of the
"to-be" process, we considered the inputs of both suppliers and
dealers. Representatives of dealers and suppliers were involved early in the
project to share their inputs to shape the system. We also adopted KANBAN -a
two-bin signal through e-transmission and Web posting to manage our supplies and
inventory.

Many cross-functional teams were put in place for
short durations to address specific issues that concerned departments across the
company. This created better ownership for the processes and data. Intensive
user programs, covering over 700 end-users and 450 dealers and 150 suppliers,
were managed over two-three months. The project went live on August 23, 2001, on
all locations, as legacy went into wrappers in one shot. In Phase 1 of SAP
implementation, we invested Rs.14 crore, while in subsequent phases, we have
invested 1-1.5% of our company's turnover.

Has the SAP implementation delivered the
required returns?

Our integration of all dealers and suppliers into the SAP information base
through the Internet, order-booking, claiming warranty, billing, delivery, and
credit status have gone online. This has motivated dealers to use the system as
the response time has been enhanced. Moreover, the monthly supplier schedules
have been made weekly and the company can track the parts with sub-contractors
and plan the production schedule depending on the orders. This is helping the
company in terms of time compression in communication of business data, thus
enhancing the ability to proactively plan for market needs. It will also help in
enhancing transparency in exceptional situations, knowledge base and performance
deviations to react faster.

Every vehicle that rolls out of the factory is
bar-coded. This has helped the company to track the vehicles, serial
number-wise, and it has been able to generate operational results at the
beginning of the first day of the month. The bar-coding has helped the company
to even track and get in direct touch with the customers. Though it is difficult
to quantify RoI, the SAP investment was recovered within 18 months. Through
KANBAN, we have been able to reduce inventory levels to an extent of some 20%,
since suppliers can now plan their schedules depending on the inventory.