Case Study - Lupin scores with SAP

http://pharma.financialexpress.com/20060930/management04.shtml

Lupin scores with SAP

Lupin has virtually doubled in size in the last three years. The SAP ERP implementation done by the company in 2003 has helped the company streamline its business processes by enhancing connectivity and accessibility

Making way for SAP

Lupin, with its operations spanning across five plants and 30 depots was facing a problem of lack of connectivity within its contact points with its Foxpro based system. "They were not working online and it used to take almost ten days to get the month end sales figure collated, compiled and presented to the marketing head. At that point of time, the decision to go for ERP was taken," says Suneel Aradhye, GM, IT. The first ERP system selected had the localised versions, wherein, every location kept on verifying it as per its own requirements. However, it was due to the lack of a centralised cohesive strategy that the ERP project failed. To acquire a centralised control, in 2001-02, the company decided to go for a bigger and better ERP.

The right choice

"There are two approaches for selection. One is to pick up the best of the breed in each area and then integrate them together. Other is to pick up the overall best product available in the market," says Aradhye. Lupin opted for SAP's ERP solution based on the parameters of technical support offered by them and the degree of customisation that can be achieved in terms of complying with the current taxation requirements and accounting standards to suit Indian conditions.

The big bang

As the first step, the company implemented Lotus notes, complete VSAT network and Lotus workflows. Before the SAP ERP (version 4.6c) roll out, all disjoined systems and locations were brought online in terms of connectivity. Lupin selected the big bang approach for the implementation, where the legacies were cut off and all the functions were moved on the ERP system from day one. "While implementing in a phased manner, people still have doubts about the success of the system. Therefore, they keep working on both the systems simultaneously. Thus, it is better to cut off the old systems and straight away migrate to the new set of systems," opines Aradhye.

All the business processes from materials, production and quality management, up to sales were covered under the implementation. The discussions and debates held between the heads of all functions led to the preparation of a document of current processes. This was followed by preparation of a blue print document to map these in SAP. Approval from the core team led to configuring the system, where each of the processes was tested independently. The implementation was done by IBM. The initial investment went in the house of Rs 15 crore, which included aspects like upgradation of network, hardware installations and cost of implementation.

SAP keeps on issuing patches that take care of issues like bug fixing, any enhancement in the current products, as well as legal changes within the organisation and in the country. These changes get applied in the organisation on regular basis to keep their version up to date.

Overcoming challenges

The user training was a major challenge. When the company went live, many of the functions were not covered by any kind of computer systems at all. Thus, the training started from the basics of computers and its applications.

SAP established a help desk comprising of ten people from the core team of 50. With the help of this team, several rounds of end user trainings were held, even though the initial training was done by IBM. This was accompanied with regular interactions and discussion sessions with core users in every function. This help desk also took care of master data supervision, day to day trouble shooting and configuring new business processes coming into system. To cope up with the changes taking place in the legal environment, Lupin took the SAP support, which comprised of patches.

Benefits galore

Since the time of implementation of the ERP package, Lupin has not required additional staff in the service areas like accounting, IT, finance and HR, although the company has virtually doubled in size. "We have to give some credit to ERP, wherein, with the help of the same set of people, we are able to handle much larger volume," opines Aradhye.

The ERP implementation also enhanced accessibility to available information. For instance, contrary to the earlier situation, even a sales manager has access to real time data with respect to the inventory levels. There is also an enhancement in online connectivity through the online accounting system. This has helped in tracking the inventory levels very closely and helped in materials planning as only the required raw materials can be ordered, resulting in cost saving to a large extent.