Smart Solutions

“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).

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.

CRM

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 herohonda.biz (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



shipraa@cybermedia.co.in