Amrit Feeds solves complex sales order forecasting with SAP ERP and IBM Global Business Services

Published on 17-Apr-2013

"It was a great experience to work with the IBM team; IBM Global Business Services treated our business needs as an individual case, and listened carefully to our requirements." - Arvind Murarka, Head of IT, Amrit Feeds

Customer:
Amrit Feeds

Industry:
Consumer Products

Deployment country:
India

Solution:
Enterprise Resource Planning, High Availability , Information Integration, Transforming Business

IBM Business Partner:
SAP

Overview

Headquartered in Kolkata, India, Amrit Feeds is one of the country’s largest producers of chicken feed, poultry and dairy products, with operations across almost all the states. The company generates a yearly turnover of $400 million and employs 2,100 people.

Business need:
Producer of chicken feed, poultry and dairy products Amrit Feeds wanted to tap into new selling opportunities. With separate sales teams spread across India, each using separate order entry methods, the company was unable to collect current and predict future business volumes. Without group-wide sales data, the company was unable to match manufacturing output to customer demand, leading to stockouts and unfulfilled sales orders – opening up the door for competitors.

Solution:
Amrit Feeds remodeled its sales order, forecasting and manufacturing processes based on integrated SAP ERP software. Improved forecasting would allow the company to plan raw materials and production requirements in advance, reduce the threat of stockouts, and help to identify new markets. Working with IBM Global Business Services, the company has eliminated separate, manual processes and introduced group-wide visibility of the entire business process from individual customer order to nationwide product manufacture.

Benefits:
Amrit Feeds has optimized production planning, and increased manufacturing capacity utilization by 10 percent. The company has raised total product throughput by 0.45 tons per hour, an increase of 2.5 percent. Amrit Feeds has cut stockout on finished goods by 16 percent and increased fulfillment rates by nine percent. Improved product availability has helped Amrit Feeds to tap into new selling opportunities and shut out competitors.

Case Study

Headquartered in Kolkata, India, Amrit Feeds is one of the country’s largest producers of chicken feed, poultry and dairy products, with operations across almost all the states. The company generates a yearly turnover of $400 million and employs 2,100 people.

With the economy growing rapidly, Amrit Feeds identified an opportunity to increase its sales and its market share. To realize its objectives, the company needed to understand who was buying what, when, and take advantage of that knowledge by tailoring its production processes to meet customer demand.

Need for deeper sales insights
With multiple sales offices tracking orders and customers independently, Amrit Feeds found it difficult to collect and analyze group-wide sales performance. The company depended on slow, manual processes, and without up-to-the-minute data it was difficult for the manufacturing teams to be certain that they were producing what customers actually wanted.

Arvind Murarka, Head of IT at Amrit Feeds, comments, “Because the sales reporting process depended on manual data extraction and integration, often producing different figures depending on which report we used, we could not rely on the information. The result was that we could not be sure that we were selling the volume of products we expected, or setting the optimal prices to stay competitive in the marketplace.”

Poor integration of information on customer orders and stock levels made the all-important long- and medium-term demand forecasting impossible. The lack of reliable forecasts made it difficult for regional managers to make well-informed decisions about production planning – leading to stockout positions. Unfulfilled customer orders represent lost sales opportunities, and competitors could step in and steal business.

Struggling to control manufacturing
Even if Amrit Feeds could integrate its sales order processes, the company’s manufacturing operations suffered from similar challenges, with separate, unconnected legacy systems in the feed production plants, hatcheries and processing facilities, and in the regional supply chains. Because of the effort involved to collate, integrate and analyze data, reporting on company-wide production efficiency was only practicable on a quarterly basis, and the company’s ability to utilize its total manufacturing capacity was dramatically reduced.

Arvind Murarka explains: “As a vertically integrated company, our business processes are highly interdependent. For example, we produce the chicken feed used to rear birds on our poultry farms, which are then transferred to our processing facilities to be frozen and distributed to wholesalers.

“A delay at any point in the chain can disrupt the whole process. Suboptimal planning was causing frequent production delays, which was a serious hindrance to achieving our objectives.”

He continues: “Using our old systems, stockouts were happening too frequently. This was a threat to both our competitiveness and our reputation in the marketplace. For example, if a delay meant that we were unable to fulfill a customer order, we risked losing future business with that customer. Most significantly, stockouts offered our competitors the chance to step in to win unfulfilled customer orders – a major threat to our own competitiveness.”

Choosing integration with SAP ERP
Amrit Feeds determined that using multiple, poorly connected systems to manage its large number of complex and interdependent business processes was the main barrier to identifying and targeting new growth opportunities and to optimizing its sales and manufacturing processes. Integration of the entire business process, from sales through to manufacturing, would offer the tight control over production needed to match output with customer demand.

To fully integrate its complex, interconnected business processes, Amrit Feeds selected SAP® ERP.

“We chose SAP ERP because we were impressed both by the positive reputation of the solution, and by the demonstrations we received from SAP,” says Arvind Murarka.

“From the product demonstrations, we realized that SAP ERP could offer us the complete end-to-end business process integration that our old systems lacked. We were equally confident that SAP ERP would support all of the industry templates we required to realize our growth objectives, and scale out easily as we expand our operations.”

To make effective use of the SAP ERP solution quickly, Amrit Feeds needed to augment its in-house IT teams with additional resources from a skilled, experienced partner.

Arvind Murarka comments: “We knew that a partner with strong competence in SAP ERP implementations would help us to accelerate the process of designing, deploying and configuring the solution – delivering the benefits of SAP ERP to the business sooner.”

With expertise in the thin margins and shifting consumer demographics that characterize the consumer products industry, IBM® Global Business Services® presented proven strategies for SAP ERP deployment to Amrit Feeds. As a result, the company chose IBM as its key design, consultancy and implementation partner.

“In selecting IBM Global Business Services, the deciding factor was the fact that the IBM team had worked on a similar ERP solution for one of the largest poultry farms in India,” says Arvind Murarka. “We knew that IBM Global Business Services had both the technical expertise and industry experience to perform our SAP ERP implementation quickly and efficiently.”

Working in close collaboration with all parts of Amrit Feeds’ business, the IBM team determined the operational drivers of value – such as production efficiency and capacity planning – that underpinned the company’s objectives of increasing revenue and optimizing capital efficiency.

Using this framework as a starting point, the IBM team created a plan to refresh Amrit Feeds’ business processes, and configure SAP ERP to support the new ways of working.

Deploying SAP ERP
The IBM team performed a detailed qualitative and quantitative assessment of the company’s current supply chain processes, and made key recommendations for a best-practice SAP ERP deployment. The team also established Key Performance Indicators to measure and track process improvements.

Arvind Murarka comments: “It was a great experience to work with the IBM team; IBM Global Business Services treated our business needs as an individual case, and listened carefully to our requirements.”

Using experience of previous implementations to accelerate deployment, IBM worked with Amrit Feeds to install and configure SAP ERP with applications for Financials and Controlling, Sales and Distribution, Materials Management, Production Planning, Quality Management, Human Capital Management and Payroll. With a framework for business transformation in place, the IBM team drew on its collective experience of change management projects to ease the transition to the new SAP ERP solution.

Through training sessions and workshops, the IBM team empowered business users across Amrit Feeds with the skills they needed to use the SAP ERP solution to perform their roles more effectively.

“We consider IBM a trusted partner,” says Arvind Murarka. “The IBM Global Business Services team was highly competent and professional, and delivered our SAP ERP solution on schedule and within budget.

“The IBM team’s expert analysis, recommendations for process improvements and training were all factors that helped us to create and capture value in new ways.”

Today, IBM Global Business Services provides application management support for Amrit Feeds’ SAP ERP solution – helping to deliver the benefits of the new solution while the company focuses its attention on manufacturing excellence and achieving its business goals.

Targeting new markets with SAP ERP
By switching all the business units to the SAP ERP solution, Amrit Feeds ensures that the disconnected, mismatched systems of the past have been replaced by a single, integrated view of operational data across all the company’s operations. Where previously data was re-entered manually to create reports, the SAP ERP applications rely on a shared database for current transactions, which can itself be used to generate forecasts for manufacturing and financial planning. “With SAP ERP solutions, we have fully integrated the value chain – even for our most remote business units – and eliminated the need for manual data entry,” comments Arvind Murarka.

“We can generate a complete real-time overview of all operations – something that was impossible before.” The SAP ERP solution gives Amrit Feeds full visibility of its markets, sales and monthly position. Based on this data, the company is able to modify its manufacturing schedules to maximize production efficiency and to eliminate stockouts.

Arvind Murarka explains, “In the past, stockouts threatened our competitiveness by giving our competitors the opportunity to win business from us. After optimizing our operations with the SAP ERP solution, that situation has changed completely.

Strong control of our supply chain means that we have reduced stockout positions by 16 percent over the whole business – ensuring we have more satisfied customers, a better reputation, and minimal risk of losing orders to competitors.” He continues: “Using the SAP ERP solution to integrate our sales order and production processes, we are able to make better decisions about production planning – cutting idle time across all processing plants by 15 percent.” Amrit Feeds now has a monthly review of all of its regional business units using a single source of high-quality, trusted data from the SAP ERP solution. The company uses this review to identify challenges, set targets and address threats to its position in the market.

“The IBM Global Business Services team’s analysis and recommendations for our feeds and poultry supply chain was especially effective,” says Mr. Murarka. “Following the IBM team’s advice, we now use SAP ERP to perform medium- and long-term materials planning – ensuring that we get the right quantities of materials at the right time.

“We have eliminated the inefficiencies associated with short-term planning, improving our feed mill production capacity by ten percent, and boosting throughput by 0.45 tons per hour.”

Mr. Murarka concludes: “We are very pleased with the SAP ERP solution. Thanks to SAP ERP and the work of the IBM Global Business Services team, we now have a platform that enables us to cut costs, increase production efficiency and ensure greater sales efficiency. The result is that we can identify and target new growth opportunities – increasing our sales and market share.”

Products and services used

IBM products and services that were used in this case study.

Software:
DB2 for Linux, UNIX and Windows

Service:
AMS: Business Application Modernization, GBS ISV Community: SAP, GBS S&T: Operations and Supply Chain, IBM-SAP Alliance, IBM Global Business Services

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