tata refractories

7/31/2019 Tata Refractories

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Tata Refractories: Another ERP success story

In the wake of the downturn in the refractory space, Tata Refractories turned to IT topush itself ahead of the competition. Today, the entire business process of the company

is designed and driven by technology. CHITRA PADMANABHAN looks at how the

company brought about a synergy between technologyand business processes

A perfect synergy between IT systems and businessprocesses is considered the ideal technology investment.Any investment in technology can only be justified if the

user company experiences significant benefits to its overallbusiness. After all, what would be the purpose of IT in a

business if it fails to become a business facilitator? TataRefractories (TR) faced a similar question when it

embarked on its IT initiative three years ago.

TR had to literally start from scratch. The situation was such that the companysemployees were not very familiar with the use of sophisticated IT systems. But thecompany wanted to stay ahead of competitors, which was impossible without the use ofIT. Its managers were plagued with questions such as, Will training initiatives befruitful? and Will we be able to justify the investments made in IT? All this because the

RoI (return on investment) could be assessed only after a certain point of time, whilequalitative benefits would be experienced as soon as the company went live with the

new system.

Market reality

TR is in the business of providing refractory (heat resistant) products used in various

industries like steel, copper, cement, aluminium, glass and petrochemicals. In thisspace, the need for using better technology is fuelled by various conditions pertaining touser industries. During the late nineties the refractory industry went through a downturn

because of poor demand from various user industries and also due to an irrational dutystructure. There was an urgent need to spruce up business. The refractory industry has

always been heavily dependent on the business conditions of industries like iron andsteel. During that phase, the refractory industry was undergoing a major change wherein

user industries were looking for total refractory solution providers over and above firmsthat catered only to individual products, says C D Kamath, the companys managingdirector.

The refractory industry needed to keep pace with rapidly developing industries like iron

and steel. These industries were looking to enhance their manufacturing capabilities,which called for drastically cutting down consumption of refractory products. As a result,

refractory companies were forced to enhance their internal technologies to suit the ever-increasing demands of steelmakers. All these initiatives forced TR to re-engineer and

streamline its complete business process to get a competitive edge.

In the beginning

TR started its IT initiatives with a definite purpose. Right from the beginning, themanagement of the company knew that there was a need for an integrated systemcovering all the processes in the organisation to achieve its objectives. After evaluatingseveral packages, the company decided to implement Baan IV C4. We were looking for

a solution having a module that could be localised to Indian taxation and duty structurenorms. Baans solution met most of our requirements, says Kamath.

C D KAMATH says theimplementation ofBaans systemincreased thecompanysresponsiveness tochanging businessenvironmentsthereby resulting ingreater customersatisfaction


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The big task ahead was to reach a sophisticated level of technology with very littleexperience. Apart from selecting key users, the ERP implementation process wasconsidered an opportunity to re-engineer business processes. We were keen on asolution that did not need too much customisation, explains Kamath. The pre-implementation process also involved creating awareness and allocating budgets.

Change management

The first step to implementation was to familiarise employees with the changes thatwere likely to take place post-implementation. In order to create a wave of change

within the organisation,

TR called the initiative Parivartan (change). The implementation also involvedcoordination with all concerned user departments to iron out any gaps in theimplementation.

Baan typically follows a two-tier approach to any big-bang implementation. The first is

the as is approach, which studies existing processes in the organisation and suggestsvarious changes that would speed them up. The second is the to be approach thatoutlines details of the changes that are likely to happen in the workflow process. Both

our approaches are basically meant to suggest the best alternative based on referencemodels picked up from all over the world. The system provides a birds eye view of theworkflow existing within the organisation, says Ravi Kathuria, Baans director ofMarketing.

With Baan being the implementation partner, TR focused on business issues rather thantechnical issues. There was a clear synergy between what we wanted to achieve in

terms of processes and the use of the right technology to achieve the same, saysKamath. The implementation took place in a span of seven months with intensive

knowledge transfer from the technology consultant to users, together with post-implementation handholding and stabilisation.

Benefits

Apart from achieving a complete turnaround in internal processes, TR benefited in otherways from its ERP implementation. From an organisation where the use of computerswas confined to a few key people, TR emerged as an organisation where the entire

business was driven by the use of IT. Easing the whole process was some excellenttraining, change management initiatives, and the advantage of not having to deal with

legacy systems.

By going in for a big-bang implementation, TR adopted the best business practicesfollowed the world over to cut costs, streamline core activities, and gain significantcompetitive advantage. An integrated ERP solution automates the entire businessprocess and helps decision makers get a holistic view of the organisation. Theimplementation of Baans system increased the responsiveness of the company tochanging business environments, thereby resulting in greater customer satisfaction,concludes Kamath.

There have been several noticeable benefits for TR, including finalisation of monthlyaccounts by the second day of the next month, transparency of inventory, enabling

faster turnover; and reduction in communication costs. TRs change from a supplier ofrefractory products to a complete service provider was thus successfully mapped and

delivered through the Baan ERP system.


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Benefits of implementation

Material planning and procurement

Inventory & WIP (work-in-progress) control

Finalisation of monthly accounts by the second day of the subsequent

month

Monitoring the control point

Transparency of WIP & inventory, enabling faster inventory turnover

Reduction in communication costs (by Rs 20 lakh per annum) since

the output data relating to customers and suppliers is hosted on theInternet

Helps in minimising inefficient processes, and thereby aids smart-

sizing

IT infrastructure at Tata Refractories

Software SSA Baan ERP IV C4

Hardware Compaq Dec Alpha 40E

Operating Platform True Unix

Database Oracle 8.0.5

Implementation Partner Baan India

No. of Users 200 (approx.)

No. of Licences 60

No. of Employees 600

Implementation Started Q2 2000

Implementation Time 7 months

Current Project Implementation of e-procurement from SSA Global

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