Smart Solutions

DQI Bureau
New Update

“The next generation enterprise will have to use the

right combination of information technologies, business structures and processer

to improve real time customer satisfaction and gain strategic competitive

advantage,” says Avnesh Jain, deputy manager, Information Systems, Hero Honda

Motors (HHML). This, in effect, is the underlying belief and strategic vision

that drives IT at Hero Honda.


Therefore, it goes without saying that all usage of IT in

the company has to be seen from a business perspective, aligning the

organization's technology deployment strategy with its business strategy. This

has now been driving the focus on streamlining the company's supplier and

dealer processes, having had the ERP in place and stabilized.

"The next generation

enterprise will have to use the right combination of information

technologies, businesser structures and process to improve real time

customer satisfaction and gain strategic competitive advantage"

-Avnesh Jain, deputy

manager, Information Systems, Hero Honda Motors (HHML)

Early Systems

Dating back to 1986, the legacy systems at HHML were disparate and stand

alone systems. Since the systems were not integrated and were highly people

dependent, there were tendencies for inaccurate information and human errors.

These systems were not robust enough to support the growing volumes and

expansion. Further, the company was facing challenges in terms of maintaining

cost competitiveness due to increasing pressure on sales and margins and growing

competition in the market. The company realized that IT was essential to gain

competitive edge and hence it started proactively looking at IT implementation

in the company.


Getting Efficient with ERP

HHML implemented SAP ERP in 2001. This included plant production (PP), sales

and distribution (SD), materials management (MM), finance and costing (F/CO) and

quality management (QM) modules. Some of the benefits derived include improved

operational processes across the company, standardized order processing across

all functions and availability of real-time information on product cost,

profitability analysis, dispatch and production status.

In 2002, it expanded the ERP with the addition of SAP's

PM and HR modules. The PM module automated the material resource planning

process, capacity planning and resource optimization processes. The automation

of plant maintenance helped in getting real time status of production plans,

production quantities, vehicle dispatches; reduction in planning cycle time;

availability of online stock status for analysis and better control over

inventories and production planning; availability of real time data for analysis

and monitoring.

Spreading Out

Having streamlined its internal processes, the next agenda for HHML has been

bringing efficiencies in its interaction with its suppliers and dealers

considering that supply chain and dealer network are among the most critical

components in manufacturing operations. The company adopted IT initiatives like

supplier relationship management (SRM) and customer relationship management (CRM).


Benefits Envisaged for DMS
  • Effective collaboration between dealer

    and HHML
  • Improved vehicle forecasting,

    allocation capabilities and production scheduling
  • Online integrated warranty and claims

    management functions
  • Leverage out-of-the-box planning

    functions for optimizing parts inventory holdings
  • Provide effective and on-line MIS and

    decision making information
  • Enable a centralized and standardized

    application across 600 dealers in India
  • Provide a single integrated platform

    to dealers for all operations
  • Leverage out-of-the-box integrated CRM

    functionality with specific emphasis on enquiry and lead generation,

    campaign management and vehicle and dealer view
  • There will not be any server end

    application at dealers end so they will be free from software

    patch/virus issues
  • Online integrated system reducing data

    collection/management time and cost


initiatives planned in the near future
  • Dealer Management System for

    collaboration with dealers
  • Disaster Recovery
  • Pilot testing of RFID application in

    one of the small functional area

The SRM Advantage

Elaborating on the need for a supplier system, Jain explains that it was

important to integrate the vendors in the production planning process as vendor

management is critical to the company considering that 68-70% of the cost of

production is material. Considering that the automotive sector depends on

suppliers providing raw material, the IT team at HHML isolated an SRM solution

to coordinate business processes with key suppliers and make them more

effective. The key business objectives behind streamlining transactions with

suppliers through SRM include better inventory planning and reduced inventory

carrying costs and becoming transparent, efficient and responsive to markets

when managing supplier functions.

Among the first in India to implement MySAP SRM version 3.0

in 2004, the company upgraded to MySAP SRM version 4.0 a year back and is

planning to further upgrade it to MySAP SRM version 5.0 in the future. The SRM

system at HHML is a web-based application, which gives the supplier an access to

customer's hosted orders for performing online transactions. The application

includes various functionalities of the order management functions like receive

purchase order/create order acknowledgement; receive delivery schedule and

create advanced shipping notification (ASN) with respect to delivery schedules

and invoice settlements. With the SRM system the purchase order is released

online enabling suppliers to respond quickly. This is followed by online

acknowledgement from the supplier. The supplier is kept informed on all issues

related to open deliverables and invoices, purchase order history, incoming

payments etc.


The SRM system automatically pushes delivery schedules

drawn up by SAP R/3 into SRM. The supplier can then access it and plan shipment

of his supplies. Once the supplier dispatches goods, the ASN updates the

database giving visibility to the in-transit supplies. The ASN in turn triggers

the in-entry and the global recycling network (GRN). As soon as the goods are

received, the vendor gets instant information of the receipt and the quality

parameters after inspection. The bill passing too has been automated.


On the dealer (customers for HHML) front, the company has implemented CRM

with a total project cost of Rs 1.2 crore, including hardware, software license

and implementation. The CRM application is presently catering to only the spare

parts stockists and dealers and has not yet been extended to cater to the

motorcycles business. The dealers login to (Linux based reverse

proxy server hosted at the service provider end). This server talks to the CRM

web server installed at the HHML data center and in turn this CRM server talks

to SAP R/3 server and gets the desired information.

The CRM application went live in June 2004. “Post

implementation we immediately saw marked improvements. Online interaction has

enhanced our order execution efficiency thereby improving our responsiveness,”

explains Jain. The old sales order process was very time consuming. Now the

dealers enter the order directly into the system. Thereby, accelerating

deliveries and preventing loss of business due to delays. The dealers can also

view their order status online, including the dispatch status, what time their

order has been executed and what time it has been dispatched model wise and

color wise.


Dealer Collaboration

Taking the streamlining of its dealer processes a step further, HHML has

undertaken the initiative of upgrading the automation for its dealers through

the dealer management system (DMS).

It plans to implement DMS for all its 600 dealers in this

fiscal, starting with a pilot including 15 dealers initially. The system will be

based on an ASP model where all the dealers will come through Internet for

processing their day-to-day transactions.

HHML today is a best practice case of managing complexity

in business planning and operations and co-ordination with the supply partners

to achieve productivity benefits.

Shipra Arora