How has ITC benefited from the use of IT?

The implementation of the strategic IT roadmap encompassing IT infrastructure and IT applications has had a significant impact on specific functional areas:

• Supply Chain Management
  

  While immigration is still a key issue, the debate is converging to a comprehensive bill. At our end, we are focused on educating different stakeholders in the US — policymakers, industry CEOs, analysts — about the benefits of globalisation.

  V V Babu, CIO, ITC Ltd

  –IT has improved our dealer level services and reduced stock out scenarios by 50 per cent in the marketplace. Through better visibility of sales, inventory and production-in-progress, ITC has maintained its leadership position and enhanced its market share despite the dip in industry volumes

• Operations, Manufacturing – IT has enabled the production planning to service dynamic marketing requirements despite a 400 per cent increase in SKUs in the past two years, and visibility of manufacturing-related information to the sales and distribution arm. Processed material wastage has declined by 25 per cent due to shop floor automation
• Finance – Forecasting of cash flow to synchronise the payouts with receivable collections has become possible leading to a 50 per cent faster closure of Book of Accounts and substantial reduction of working capital
• Customer Service/Relationships – While customers have visibility to order status, ITC businesses can respond quickly and accurately to queries, leading to higher customer satisfaction levels with better product quality and responsiveness of the company
• Business Intelligence – Implementing data-warehousing technologies and using predictive analytics and lead indicator tool kits, has led to a detailed view of customers and improved decision making

Businesses and business users today rely so much on the 24×7x365 availibility of IT services that a shipment cannot be made from the warehouse in case the ERP system is down. During the last one year, we have set up many warehouses and processing plants – all IT-enabled from day one. Our computing infrastructure today makes it possible to set up and make operational IT facilities in any new location in three days flat.

Q: What steps can the government and IT-BPO services providers take to catalyse IT deployment within Indian companies, especially SMEs?

A: SMEs today comprise more than 99 per cent of the organisations globally and contribute to more than 40 per cent of the global GDP. Growing at a fast rate all over the world, they have become an attractive industry segment for ICT products and services. Over 3.50 crore Indian SMEs contribute to over 60 per cent of the GDP with the average Indian SMEs revenue growing roughly by 12 per cent YoY. IT spending globally by SMEs is expected to exceed USD 200 billion by 2020.

The management style of SMEs, along with their entrepreneurial culture, has allowed easy adoption of ICT solutions. In fact, SMEs ability to implement off-the-shelf solutions is a good lesson for large companies planning to implement packaged software solutions. Through smarter implementation of ERP solutions many progressive SMEs have derived business value, creating competitive advantage in the market. They have found new ways of doing business using web services, reducing costs in the value chain, and simplifying governance processes, etc.

To tap into this growing opportunity in the SME space, ICT vendors need to create niche solution offerings in the area of network and desktop security, archival and back-up, network infrastructure, accounting, supply chain and CRM solutions.

However, unlike large organisations, where big project teams work with detailed implementation methodologies covering as-is processes, to-be processes, POCs/prototypes, change management, etc., SMEs want faster roll out of the solution at value-for-money investments. SMEs have taken up wireless and mobile solutions due to their universal acceptance and dramatically reduced telecommunications expenses, thereby reaping associated benefits much faster. Hence, ICT players need to create no-frills pay-as-you-use solutions using SaaS, Cloud Computing and ASP models. These solutions must be easy to implement and scale up, have a reduced TCO and achieve quick ROIs.

Q: How has Sheela Foam benefited from the use of IT?

“IT has been a great contributor to our momentum. It has had an impact in areas such as distribution, production, planning and procurement.”

Pertisth Mankotia, Sheela Foam

A: We have covered our entire system through ERP and integrated our distributors and channel into the supply chain. The idea was to bring them to our level and enable them to enjoy the business benefits of IT, which has resulted in a growth of about 30 per cent. IT has had an impact in areas such as distribution, production, planning and procurement. It has helped improve delivery efficiency (leading to quicker delivery of foam). IT has enabled us to measure delivery efficiency — from manufacturing to distribution. We are currently in the process of measuring the distributor to dealer delivery efficiency.

A key benefit of IT has been its contribution in controlling our market operating price. What happens is that the moment the material is shipped from manufacturing to distributors, it gets recorded in the ERP. The distributors then sell to the dealers and each product they sell is identified with a unique serial number. The idea is to give the customer a single price, even if he/she visits 10 different places. If the dealer is not doing this, we send an SMS stating that the delivery will be stopped. In this way, IT has also helped reduce unauthorised selling of our product and ensured its genuineness.

At the same time, tracking our product has become possible, when it travels in between states, by tracing the serial number, and in case trespassers are involved, they are penalised. Eliminating unauthorised dealers, has improved our market operating price by 90 per cent. In the area of production and order placement too, a host of benefits have been accrued due to automation. The moment the distributor places the order, it comes to our system. After checking the stocks, we club all the orders together, so that we can plan the raw material, etc., making our production more efficient. We have an appraisal system linked to the productivity of our people. It takes care of quality and delivery efficiency.

We have an interesting practice where we send an SMS to all key executives and sales staff at 6 am, which updates them about all the key business parameters — order status, targets, and the week’s top and bottomline. With this process in place, no reports are needed.

Additionally, we have been able to track our secondary and tertiary sales by using IT. We come to know about our actual market movement and the areas and product segments where there is potential and where there isn’t.

Q: What can vendors and the government do to catalyse IT deployment within Indian companies, especially SMEs?

A: Most SMEs need three things to adopt IT: attitude, courage, and software and infrastructure. The government and IT services providers can contribute in the third area.

Today, the government is compelling companies to provide electronic data to pay their taxes, etc. In this way, organisations have to automate to conform to government norms. Thus , leading to a better understanding of the benefits of IT among companies. In our case, we took three years to see the benefits of IT adoption.

Another area, where we need to see improvement relates to SMEs. The smaller companies are typically being addressed by smaller IT services providers, which are often not geared up to meet their software needs. It would be great if some industry mechanism could be devised where companies could refer to a list of authorised vendors and purchase their technology from them. NASSCOM can play a role here and come up with an approved vendor list that SMEs can refer to, so that they can avoid falling in the wrong hands.

Software licensing fees is still very high, which prevents smaller companies from going for cutting-edge software, or even upgrading it. There should be some kind of policy to ensure that software licensing is not prohibitive in terms of costs.