Gains from the E-chain

Ever since Emerson Electric bought out the Tata’s stake in Mumbai-based

Tata Liebert, things have been looking up for the newly formed multinational.

Renamed as Emerson Network Power (India) in September 2001, the wholly owned

Indian subsidiary now has access to the best practices from its $15.5 billion US

based parent company. The Indian operations previously had access to best

practices only from Liebert. "Transfer from Emerson was always a step

away," points out SS Bapat, general manager, TQM, and HR. Now in addition

to Liebert, there is transfer of know-how from Asco Power, Emerson Energy System

and the parent company itself. And it’s the incorporation of the Indian

subsidiary into the mainstream of global processes that has got the pulse

running at the company’s Thane (Mumbai) headquarters. Emerson Network Power (ENP)

is currently being phased-into the global e-procurement supply chain.

Internationally, the phase-in process for Emerson companies started in 1999.

But the Indian operations of ENP have been made into a blueprint since November

2001. "This is a part of what is called the seventh stage, with 60 of the

80 global companies already living in the global supply chain," clarifies

Royston Fernandes, assistant manager of operations, who is also coordinating the

Indian initiative. So, what is the reason for the slow entry into this unifying

procurement process? Every local subsidiary operation has its own business IT

application, set of products, component items, and supplier terminology as part

of its information systems. ENP India for example, is using QAD’s Mfg Pro ERP

on a Hewlett Packard 9000 server system. It has three business units, seven

product lines, 10 brands, 140 coded commodity items, and 300 active suppliers as

part of its procurement process. The challenge is in achieving a unified form of

item and supplier coding as well as migration to a common platform of

information exchange.

As far as the information exchange platform is concerned, Emerson

subsidiaries have been provided with a browser-based application called Explore,

developed by Bangalore based Aspect. This application is the peephole into

Emerson’s global supply chain and allows all live companies to participate in

information exchange and procurement. Explore also validates the format of data

being uploaded into Emerson’s global e-procurement network called Material

Information Network (MIN).

Looking at examples of how the global e-procurement process can help ENP

India, Bapat cites the boom and bust example of data centers in the country. In

early 2001, ENP India received a large number of orders for UPSs from Internet

data centers. However, by the second half of 2001, it was apparent that the boom

was over and ENP India was stuck with an excess inventory of cooling fans.

"The cross exchange of inventory stocks between Emerson companies available

in MIN would have helped in such a situation," points out Bapat.

Are there any concern areas in this roll-out process? While dynamic pricing

accounted for 15% of total e-commerce transactions and is expected to rise to

40% by 2004, Gartner also has its share of warnings. Gartner points out that

dynamic pricing is a prime driver for early adoption of e-procurement. And it is

also most responsible for disruption in established trading relationships.

Moreover, the prevalent mindset in Asian countries is for pricing to be

trade-driven versus the more volatile approach in US business.

However, both Fernandes and Bapat counter this possibility by indicating that

globally, Emerson is following a bottoms-up approach. It has not issued any

diktats and expects local operations to set their own pace and business

expectations. For its procurement requirements, ENP India directly imports 25%

by value, 30% through traders and 45% through local manufactures. Bapat admits

that relationships with some domestic suppliers may get affected, but those with

secure tieups with global vendors will remain unscathed. With all this in stock,

the second half of 2002 promises to be a challenging one for ENP India and its

supplier community.

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