Steel manufacturer adapts Web based ERP for growth

BANGALORE, INDIA: By swiftly adapting to Web-ERP in a record six months for its three locations, four business divisions and 21 operating units, Sujana Metals Projects Limited (SMPL) have overcome all its process inefficiencies. 

Success in business is not only about offering great products created through great engineering, but also providing nothing short of the best to customers. This philosophy has guided Sujana Metal Products Limited (SMPL) from the day of its inceptions. Headquartered in Hyderabad, SMPL is part of the Sujana Group of companies, and is into marketing value – added steel products.

A pioneer in manufacturing TMT (Thermo Mechanically Treated) bars of various sizes, the company caters to clients in construction, infrastructure and other sectors. The company’s two other divisions are located in Chennai and Vishakhapatnam. In the two decades of its existence, SMPL has consolidated its position as a leading secondary steel producer within the country. A few years back, SMPL purchased a crude steel rolling mill and by adopting technology, converted this into a TMT manufacturing facility, and is now in the process of improving it further. “We have automated our production processes completely. Technology is what enables us to maintain quality; and that’s how we are able to serve our customers better,” said Manivannan.

Operational challenges linked to growth

From a re-rolling mill to a sophisticated and automated multi-location, multi-functional organization, SMPL has grown significantly in the last one decade. But business expansion has also brought along many challenges. Till a year back, the company had only routine technology systems in place to handle its management related processes. But those were not enough to handle the increase in transactional volumes and operational expenses, says Manivannan. To address the burgeoning complexities, in August 2008, the company started deliberating on an ERP (Enterprise Resource Planning) system to link its disparate processes and create a culture of having a readily available organizational database for all its employees to refer to.

The broader goal was to create a futuristic company that would be scalable and flexible, and that adapts to and meets any of its growth/ expansion-related challenges, says Manivannan.

SMPL analysed several solutions, focussing on their pros and cons, and comparing its own requirements against each of those solutions. Initially, SMPL narrowed down on Ramco’s on-premise model, but eventually zeroed in on its Ramco OnDemand ERP (RODE), a web hosted model. Cost and its swift implementation advantage – the key factors that most web-based solutions are known for, primarily drove the decision. Manivannan affirms: “Considering that, for an implementation of our size, any on-premise implementation takes at least an upfront investment of Rs.1 Crore, the cost of having a web based-ERP doesn’t put so much pressure on an organisation”.

Web based ERP – a perfect fit for SMPL

Yet, arriving at the decision was not so easy. The management had its own share of doubts. Manivannan recalls: “There were doubts about whether the web based ERP system would satisfy the organizational requirements; whether it would deliver value for money’, would it be easy to implement; would the data be so secure, and so on”. But gradually Manivannan’s team, with support from the Ramco team, addressed each of these doubts and accomplished the buy-in, internally.

Data security was the major area of concern. But Ramco shared facts related to the level of data security that its solution ensures. We realized that, in fact, the data would be equally or more secure on the Ramco platform than it was under our existing system” adds Manivannan.

Apart from this, SMPL management wanted to remain focuses on the core function, i.e., manufacturing steel products. Manivannan elaborates: “We don’t have any core competency in IT. Having a web-based ERP meant that we could do without hiring any IT team. Besides, retaining IT talent in a manufacturing company is also difficult. Now, we don’t need an elaborate in-house IT team. We are managing with a lean team comprising of five staff members, who have the basic IT skills, which is enough to render the basic level of support to users”.

Gearing up for the transformation

SMPL started the implementation in October 2008 and completed the first phase of going live by January 2009. As project leader, Manivannan was prepared to deal with the typical problems that surface when any ERP implementation takes place. He knew that if the requirements are not stated clearly, then the software agency will not be able come up with a solution matching the organisation’s needs.

“Ramco has a sophisticated process to understand what customers want; that also helped. Once the model was validated, the product was made ready,” says Manivannan.

The process took six months, spreading over four months for the first phase of implementation and another two months for the second phase, bringing 100 users on board the RODE platform. Other than production, all other processes like finance, logistics, inventory management etc, have been covered in the first phase by the ERP system.

The ROI

Manivannan feels that it is too soon to assess the Return on Investment (ROI) in monetary terms, but he believes that the cultural change that has come about post ERP deployment is heartening, especially with regard to how people are leveraging organisational data.

“Prior to implementing RODE, the data collection and report generation process was tedious and time consuming. Besides, the company depended on a few people who did this task, manually. But with the arrival of ERP, it has become possible to collect data at the point of origin and users can generate the kind of reports they require”.

“Currently, about 80 per cent of our manpower is making use of the organisation database,” he says.

Now, the company can efficiently handle its internal processes. Besides allowing senior management and concerned officials anytime, anywhere access to consolidated data from multiple locations, the ERP implementation has enabled the availability of real-time information across the organisation from its different units & sub-units he adds.
“Considering SMPL’s distributed set up (with factories and offices in different locations across India) the hosted model has proved to be an ideal fit. All it required for the organisation to go live with the system was to have an internet connection with good broadband connectivity. Now users at SMPL can access the ERP from anywhere, anytime,” says Sukumar R, general manager – Ramco OnDemand ERP.

Going Forward

By setting new quality benchmarks and defining industry best practices, SMPL has been winning and serving customers like DLF, L&T, and many others. It recorded a turnover of Rs. 2700 crores in the last financial year and has diversified operations in Andhra Pradesh, Tamil Nadu, Kerala and Karnataka, says Manivannan.

Though, so far, the company has dealt directly with its customers, recently SMPL has even ventured into retailing its products, with an aim to expand its market further. Another growth plan is to upgrade its manufacturing capacities and become a totally integrated manufacturer by integrating processes, such as mining, furnaces and rolling mills. The aim is to join the league of players like Tata Steels and offer value-added steel products to the telecom and power industry.

With technology on its side, and its goals clearly defined, the company plans to continue its journey towards achieving newer milestones.