IT Boost for Manufacturing

BFSI, telecom and government might be the star verticals in
India Inc in terms of IT usage, but manufacturing has been gradually catching up
in the last few years. At Rs 3,969 crore, this sector rightfully claimed its
place among the Top Five verticals in IT adoption during 2004-05. So widespread
and pervasive has been this adoption that many industry analysts have started
claiming that IT has perhaps been the biggest factor in the turnaround witnessed
by the manufacturing sector last year.

Increasing ERP adoption, improving supply chain efficiencies
with SCM, streamlining procurement with e-sourcing, trimming time to market with
PLM and reducing inventories were on the IT palettes of most manufacturers
throughout the year. SAP easily led the ERP bandwagon with maximum following,
though Oracle did not trail by a long distance. SSA Global and Ramco albeit had
lesser presence, though they still managed to garner some fan following amongst
the SMBs.

Enterprise Applications Rule the Roost

SAP was particularly predominant in the automobile and auto ancillaries
sector, both on the ERP and CRM fronts, with star clients like Mahindra, Hero
Honda, Tata Motors, TVS Motors, and Bajaj Auto amongst others. Maruti Udyog was
one notable exception using Oracle ERP and i2 SCM solutions. An interesting
development in recent weeks has been the Oracle acquisition of Siebel CRM-Tata
Motors has been using SAP ERP and Siebel CRM and it would be of particular
significance to see where it goes next. That might impact the future strategies
of many manufacturing companies for their IT adoption.

Procurement was a major focus area for automation by many of the
manufacturing concerns and this naturally resulted in the coming of age of
e-sourcing. The e-sourcing solution market witnessed major consolidation-Ariba
emerged as the numero uno with niche vendors like India Markets and Synise
Technologies too remaining in the fray, while Wipro 01 markets, one of the
erstwhile major players, disappeared from the scene.

Dabur saved Rs 2.5 crore with six reverse auction deals, Tata
Motors saved Rs 22 crore on transactions worth Rs 362 crore, while the Kirloskar
group saved Rs 7 crore through reverse auction worth Rs 50 crore. Ashok Leyland
and Crompton Greaves were the other major success stories-Ashok Leyland's
contract with Wipro Infotech involved developing a roadmap for strategic cost
reduction and supplier relationship management; Crompton Greaves not only saved
more than Rs 60 crore through reverse auctions, its CFO personally admitted that
e-sourcing perhaps saved the company from liquidation.

It was often not only piecemeal ERP or e-sourcing, but in many
cases the organizations went for total enterprise application suite. Oracle's
e-biz suite involving Oracle Balanced Scorecard, Enterprise Asset Management,
Financials, HRMS, Manufacturing, Sales, Services and SCM helped Laxmi Machine
Works ramp up revenues by 20%. LML, Agro Tech Foods and Triveni Turbines too
benefited from enterprise application suites.

PLM Reduces Design Time

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 like Larsen & Toubro's
LTM Business Unit at Chennai, BHEL in Hardwar and BEL in Bangalore. BEL has been
able to reduce the average time for approving engineering designs from 40 days
to just six and a change request for drawing from 60 to 20.

PLM solutions like Wrench used in conjunction with CAD/CAM tools
like AutoCAD were the favor of the day. L&T has been able to use Wrench to
reduce design cycle time and also to introduce variations in its designs
real-time. Sansera Engineering used AutoCAD and Wrench to build sample products
for customers like Yamaha in Indonesia, Brazil and Italy. Yuken India also used
AutoCAD to trim its design cycles for hydraulic pumps and valves it exports to
Japan, Taiwan, Britain and Spain.