Cadbury Success

S.P. JAIN INSTITUTE

OF MANAGEMENT &

RESEARCH

MUMBAI

Study of the BPR and ERP implementation activities in Cadbury

Jul – 2010 roup Jai Sin!h "anica Ran!ne#ar Ra$at Chandra


P%& 0'(11

Saurav "umar )en#ta Ra!havan

Contents Contents Conten ts.......... ...................... ........................ ....................... ....................... ........................ ....................... .................. ............ .......... .......... .......... ......... ......2 PROJECT SCOPE: .......... ...................... ........................ ....................... ....................... ........................ .................. ........... .......... .......... .......... ........ ... 3 PROJECT DELIVERAB D ELIVERABLES: LES:........... ....................... ....................... ....................... ....................... ................ .......... .......... .......... .......... .......... ..... 3 COMPAN INTRODUC INTRODUCTION TION............ ....................... ....................... ........................ ...................... ............... .......... ......... ......... .......... ......... .... 3 CADBUR!S CADBU R!S CRITICAL CRITI CAL BUSINESS BUS INESS PROCESSES PRO CESSES ............ ...................... ............... .......... .......... .......... .......... .......... ......... .... " So#$%n' So#$% n'............ ....................... ....................... ........................ ....................... ....................... ................... ............ .......... .......... .......... .......... .......... ....... .. ( P$o)#%ton P$o)#% ton *+,nn *+,nnn' n'............ ....................... ....................... ........................ ....................... ....................... ........................ ................. .......... ..... Inento$/ %ont$o+........... %ont$o+....................... ........................ ....................... ....................... ...................... ............... .......... .......... .......... .......... ........ ... 0 Dst$1#ton Dst$ 1#ton & Lo'st%s Lo' st%s............ ....................... ....................... ........................ ....................... ....................... ................... ............ .......... .....  Fn,n%e Fn,n %e & HR ............ ........................ ....................... ....................... ........................ ....................... ....................... ................. .......... .......... .......... .....  C,)1#$/ C,)1#$ / In), H' H ' Lee+ B#sne B #sness ss P$o%ess M,*........... ..................... ............... .......... .......... .......... .......... ........ ... 44 Te Lee+ 4 1#sness *$o%esses............ ......................... ......................... ........................ ......................... ....................... ..........42 Lee+ 2 B#sness B#s ness P$o%esses P$o %esses ............ ........................ ....................... ...................... ................ .......... .......... .......... .......... .......... ....... .. 42 T/*e o5 BPR 6*+e6ent,ton............ ........................ ......................... ......................... ........................ ......................... ................... ......4" ERP IMPLEMENTATION METHODOLOG CHALLENGES......................................... ......................................... 40 40 BUSINESS BENEFITS OF BPR AND ERP IMPLEMENTATION............. .................................... ....................... 27 27 Bene5ts Bene5 ts s*e%5% s*e%5 % to C,)1#$/ C,)1# $/........... ....................... ....................... ....................... ..................... .............. .......... .......... .......... .......... ..... 2( Le,$nn' ,n) $e%o66en),tons $e %o66en),tons 5$o6 5 $o6 C,)1#$/ 6*+e6ent,ton........... .......................... ............... 20 20

S.P. J,n Instt#te o5 M,n,'e6ent & Rese,$% Ente$ So+#tons8 J#+!2949

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Saurav "umar )en#ta Ra!havan

Contents Contents Conten ts.......... ...................... ........................ ....................... ....................... ........................ ....................... .................. ............ .......... .......... .......... ......... ......2 PROJECT SCOPE: .......... ...................... ........................ ....................... ....................... ........................ .................. ........... .......... .......... .......... ........ ... 3 PROJECT DELIVERAB D ELIVERABLES: LES:........... ....................... ....................... ....................... ....................... ................ .......... .......... .......... .......... .......... ..... 3 COMPAN INTRODUC INTRODUCTION TION............ ....................... ....................... ........................ ...................... ............... .......... ......... ......... .......... ......... .... 3 CADBUR!S CADBU R!S CRITICAL CRITI CAL BUSINESS BUS INESS PROCESSES PRO CESSES ............ ...................... ............... .......... .......... .......... .......... .......... ......... .... " So#$%n' So#$% n'............ ....................... ....................... ........................ ....................... ....................... ................... ............ .......... .......... .......... .......... .......... ....... .. ( P$o)#%ton P$o)#% ton *+,nn *+,nnn' n'............ ....................... ....................... ........................ ....................... ....................... ........................ ................. .......... ..... Inento$/ %ont$o+........... %ont$o+....................... ........................ ....................... ....................... ...................... ............... .......... .......... .......... .......... ........ ... 0 Dst$1#ton Dst$ 1#ton & Lo'st%s Lo' st%s............ ....................... ....................... ........................ ....................... ....................... ................... ............ .......... .....  Fn,n%e Fn,n %e & HR ............ ........................ ....................... ....................... ........................ ....................... ....................... ................. .......... .......... .......... .....  C,)1#$/ C,)1#$ / In), H' H ' Lee+ B#sne B #sness ss P$o%ess M,*........... ..................... ............... .......... .......... .......... .......... ........ ... 44 Te Lee+ 4 1#sness *$o%esses............ ......................... ......................... ........................ ......................... ....................... ..........42 Lee+ 2 B#sness B#s ness P$o%esses P$o %esses ............ ........................ ....................... ...................... ................ .......... .......... .......... .......... .......... ....... .. 42 T/*e o5 BPR 6*+e6ent,ton............ ........................ ......................... ......................... ........................ ......................... ................... ......4" ERP IMPLEMENTATION METHODOLOG CHALLENGES......................................... ......................................... 40 40 BUSINESS BENEFITS OF BPR AND ERP IMPLEMENTATION............. .................................... ....................... 27 27 Bene5ts Bene5 ts s*e%5% s*e%5 % to C,)1#$/ C,)1# $/........... ....................... ....................... ....................... ..................... .............. .......... .......... .......... .......... ..... 2( Le,$nn' ,n) $e%o66en),tons $e %o66en),tons 5$o6 5 $o6 C,)1#$/ 6*+e6ent,ton........... .......................... ............... 20 20


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PROJECT SCOPE: Study the implementation of Business Process reen!ineerin! in one of the company Cadbury *hich holds one of the finest supply chain and a company *hich has been on the fast trac# on the !ro*th *ith its foot on the accelerator pedal in full throttle+ Study the implementation of Enterprise Resource Plannin! *ithin the or!ani,ation *hich has operations in over -. countries and ho* the operations have been inte!rated and analyse the challen!es faced and derive learnin! out of the same

PROJECT DELIVERABLES: 1+ /denti /dentify fy five criti critica call busines businesss process processes es 2+ Plot Plot the proc process ess map map of the the or!an or!ani,a i,atio tionn + nalyse nalyse the the type of BPR implementa implementation tion in in the compa company ny + nalyse nalyse the ERP ERP implementa implementation tion in the compa company ny and the the challen!e challen!ess -+ Busine Business ss bene benefit fitss and and learn learnin! in!ss

COMPANY INTRODUCTIO INTRODUCTION N 3he company that *e have chosen for the visit is Cadburys+ 3he company has seen a !reat !ro*th phase+ Cadbury /ndia is a fully o*ned subsidy of "raft 4oods /nc+ 3he combination of "raft 4oods and Cadbury creates a !lobal po*erhouse in snac#s5 confectionery and 6uic# meals+ 7ith annual revenues of appro8imately 9-0 billion5 the combined company is the *orld:s second lar!est food company5 ma#in! delicious products for billions of consumers in more than 1.0 countries+ 7e employ appro8imately 105000 people and have operations in more than ;0 countries+ /n /ndia5 Cadbury be!an its operations in 1'< by importin! chocolates+ fter .0 years of e8istence5 it today has five company(o*ned manufacturin! facilities at 3hane5 /nduri =Pune> and &alanpur =*alior>5 Ban!alore and Baddi =?imachal Pradesh> and  sales offices =@e* %elhi5 &umbai5 "ol#ota and Chennai>+ 3he corporate office is in &umbai+

Currently5 Cadbury /ndia operates in four cate!ories vi,+ Chocolate Confectionery5 &il# 4ood %rin#s5 Candy and um cate!ory+ /n the Chocolate Confectionery business5 Cadbury S.P. J,n Instt#te o5 M,n,'e6ent & Rese,$% Ente$ So+#tons8 J#+!2949

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has maintained its undisputed leadership over the years+ Some of the #ey brands in /ndia are Cadbury %airy &il#5 - Star5 Per#5 Aclairs and Celebrations+ Cadbury en$oys a value mar#et share of over ;0 ( the hi!hest Cadbury brand share in the *orld+ /n the &il# 4ood drin#s se!ment its the leadin! &alted 4ood %rin# =&4%> in the country+ Similarly in the medicated candy cate!ory it is the undisputed leader+ Since 1'.- Cadbury has also pioneered the development of cocoa cultivation in /ndia+ 4or over t*o decades5 it has *or#ed *ith the "erala !riculture Dniversity to underta#e cocoa research and released clones5 hybrids that improve the cocoa yield+ 3he team visits farmers and advise them on the cultivation aspects from plantin! to harvestin!+ /t also conducts farmers meetin!s  seminars to educate them on Cocoa cultivation aspects+ Fur efforts have increased cocoa productivity and touched the lives of thousands of farmers+


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CADBURY’S CRITICAL BUSINESS PROCESSES Cadbury Gtd is a manufacturin! and distribution company5 its products includeH

3hese products fall under the cate!ory of 4ast &ovin! Consumer oods =4&C>+ 3he characteristics and re6uired performance indicators of perishable 4&C productsH


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3he above parameters define the critical business process of Cadbury+ 3hese factors are in for*ard or customer facin! supply chain of Cadbury PGC+ ?o*ever5 in order to fulfill above re6uirements the up*ard supply chain should also be loo#ed into and perfected+ Fur !roup has identified the follo*in! critical business processes for Cadbury PGCs successH

Sourcing s the economy increases in comple8ity5 it has become more difficult for or!ani,ations to

adapt to mar#etplace chan!es+ Fr!ani,ations can no lon!er efficiently possess all e8pertise in(house+ 3he result is a !reater dependence on interrelationships *ith outside or!ani,ations that can provide the e8pertise these or!ani,ations may be lac#in!+ /n particular5 manufacturin! companies may find it advanta!eous for suppliers to provide products and services rather than performin! them in(house+ Futsourcin! is a supplier a!reement that may come to mind for most readers+ ?o*ever5 there are several types of supplier a!reements a company may rely upon+


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Cadbury produces chocolates and products derived from it5 cocoa bein! an internationally traded commodity and not produced in /ndia plays an important role in the chocolate supply chain+ /n addition various other products such as nuts5 mil#5 su!ar etc+ are re6uired by Cadbury5 all these commodities are perishable *ith very short shelf life+ 3he procurement and sourcin! of these commodities play a ma$or role in the business+

Fig: shows the typical supply chain for cocoa and holds for other commodity products required by Cadbury PLC

n instance of the importance of sourcin! can be found in the recent fairtrade practices follo*ed by coffee and chocolate ma#ers and the production of fairtrade chocolate no* in pro!ress in European countries by Cadbury PGC+ Sourcin! strate!y at Cadbury outlines the lon! term and short term sourcin! contracts *ith the suppliers+ /t also aims to discover partnerships *ith intermediaries and lo!istics providers to assure availability of ra* materials in a smooth fashion and at fair prices+

Prouction !"#nning &any of Cadbury PGCs products have a seasonal demand5 some of them also a

smooth demand over the year+ Production plannin! aims to utili,e machinery and manpo*er at Cadbury PGCs facilities in order to have a smooth production schedule *hile maintain optimum capacity utili,ation+


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4ollo*in! processes are involved in production plannin!H 1+ %efine machine families5 Shift hours and manufacturin! capacity 2+ %efine manufacturin! processes5 process set up times and production throu!hput rates+ + %etail resources and processes involved for each $ob5 materials re6uired and *or# instructions+ + 4orecast and schedule resource re6uirements and trac# vs capacity+ -+ Re(schedule *or# and re(allocate resources to meet customer re6uirements+ .+ Prioriti,e *or#load and process $obs+ ;+ Carry any $obs not run as scheduled to ne8t shift and ensure all incomplete $obs are on the schedule+ <+ utomate clerical tas#s and enable timely and relevant production schedulin!+ n efficient production plannin! system at Cadbury *ill enable it to achieveH 1+ Supply chain optimi,ation+ 3he system can connect to an &RP+ 2+ &aterial Re6uirements Plan to ensure the necessary materials for order are on hand or ordered on time+ 7e can also provide an &RP system if needed+ + Reduced schedulin! effort by arran!in! an optimal schedule per the constraints+ 7.

Gabour load levellin!+ Reduce labour spi#es and declines by pro$ectin! schedule into the future+

-+ Real time information+ )ie* the $obs that are currently runnin!5 allo* customer services to see the capacity available+ .+ /dentify and reduce bottlenec#s+

In$entor% contro" 3he ma$ority products of Cadbury PGC have a lo* shelf life and one of the #ey

performance indicators accepted by Cadbury is the 4reshness /nde8 of the products delivered by them to the consumer+ t the same time5 Ran!e vailability at %istributors are to be #ept at a min of '- and is bein! currently maintained+


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/nventory control allo*s Cadbury PGC to achieve lo* inventory levels thereby reducin! costs and achieve !reater freshness inde8+ /nventory control ho*ever5 does not aim to specifically reduce inventory5 a sufficient inventory levels must be maintained to have a service level at the %epot of '- R%+ /t also helps to reduce distribution runs thereby savin! transportation and lo!istics costs+ 3he uIs inventory of ra* materials helps to smoothen availability and reduce ris#s of ra* material unavailability for production at the same time !uard a!ainst price fluctuations in commodity mar#ets+ 3he associated costs saved include but limited to5 machine and manpo*er utili,ation vs+ inventory costs and costs of sourcin!+

Distri&ution ' Logistics

3he lo!istics mana!ement area covers the activities related to the physical flo* of materials5 semi(elaborated products5 ra* materials5 and the ac6uisition by the initial providers from the sale to the consumers+ 3his includes the stora!e5 production and distribution of the products+ 3he conception of the lo!istic environment in an inte!rated *ay is reached throu!h the inte!ration of all5 and each of the activities that constitute it+ %istribution and lo!istics form a ma$or chun# of costs under sellin! e8penses in /ndia it forms .+- of /ndias %P and 1 of DS %P+ %istribution and lo!istics also determine location of *arehouses and depots for optimal availability at the customer level+ 4or Cadbury distribution is not one *ay but rather a t*o *ay process5 *here(in there are costs associated *ith returns and stales+ /t also plays a part in ensurin! the 4reshness /nde8 of products+

(in#nce ' )R

3he intense competitiveness in the !lobal mar#ets demand an improvement in the results+ /n this conte8t5 it is critical of the mana!ement of human resources+ 3he concept of ?uman Resources as a cost !enerator has to chan!e into a profits !enerator+?uman Resources is a S.P. J,n Instt#te o5 M,n,'e6ent & Rese,$% Ente$ So+#tons8 J#+!2949

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fundamental part of the scheme of every successful enterprise5 as the information received by this area needs to have a continuous follo*(up and correct evaluation for the professional development and the social *elfare of the *or#ers+ ?o*ever5 due to the lar!e 6uantity of information that is handled in this area5 the $ob is becomin! more difficult everyday+ ERP is represented li#e a useful tool to help and orient the users to focus their *or# in the direct relationship *ith the staff5 and to lin# the personal s#ills and aspirations of the personnel related to the ob$ectives and !oals of the company+ Cash mana!ement is a fundamental application that allo*s you to mana!e your accounts+ /t includes ban#s5 savin!s institutions and char!e cards+ ll the appropriate functions are conveniently centrali,ed in one location+ 3he application provides facilities for accountin! staff to receive payments5 ma#e deposits5 print chec#s5 record manual chec#s5 record funds transfer and card char!es5 pay off char!es and reconcile your cash accounts+


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C#&ur% Ini# )ig* Le$e" Business Process M#! Cadbury /ndia PGC is essentially a manufacturin! and distribution company and as such shares many of its processes *ith the manufacturin! industry+ 4i!ure 1 !ives a layout of its facilities in /ndia+ 3he business processes of the company are ali!ned to its ob$ectives as stated in the companys mission5 “Financial scorecard, judiciously reinforced by our quality, commitment and culture”. 3he stated ob$ectives in the

confectionery business translate into a fresh product available at arms len!th to the consumer at a profit+ 3o achieve the implied ob$ective Cadburys processes need to be efficient5 lean and responsive to the consumers demand+ 3he processes and intermediaries involved in the cash to cash cycle for Cadbury /ndia is as sho*n belo*H

(igure + : C#&ur% Ini# (#ci"ities Loc#tion ,Source C#&ur% Ini# -e&site.

F'#$e 2: C,)1#$/ In), S#**+/ C,n


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T*e Le$e" + &usiness !rocesses S,+es ,n) O*e$,tons P+,nnn' 2. M,ste$ Reso#$%e P+,nnn'

(,. B#/

3. M,ste$ S%e)#+n'

-,. In

(1. P#$%,sn' %ont$o+

0. M,e

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49. P$o)#%ton & In Cont$o+

7. S,+es P+,nnn'

. Se++

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44. S,+es Cont$o+

42. HR8 Re*o$tn' & Fn,n%,+ 6e,s#$e6ent

Le$e" / Business Processes 1+ Sales and Fperations plannin! a+ Product conceptuali,ation b+ Product desi!n c+ En!ineerin! development d+ Strate!ic  forecasted sales tar!ets e+ %efine and communicate product intent f+ &ana!e en!ineerin! chan!es 2+ &aster Resource Plannin! a+ %evelop family *ise production plans b+ sses capacity + &aster schedulin! a+ Schedule production runs based on demand forecasts and orders b+ %evelop capacity re6uirements + Sales plannin! a+ Go!istics b+ 7arehouse capacity c+ Gocation plannin! d+ Schedulin! e+ %ispatchin! f+ Sales tar!ets


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Study of the BPR and ERP implementation activities in Cadbury -+ Buy a+ b+ c+ d+ e+ f+ !+

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&ana!e supplier relationships Plan and order production material @on production material 3rac# inbound material Receive and mana!e production material Receive and mana!e non(production material Receive and mana!e service parts

.+ /nventory control a+ 3rac# receipts b+ &aintain and record inventory levels c+ 3rac# outbound inventory ;+ &a#e a+ Produce product b+ Control production levels <+ /nventory a+ 3rac# receipts b+ &aintain and record inventory levels c+ 3rac# outbound inventory '+ Sell a+ b+ c+ d+ e+ f+ !+

Frder processin! Product schedulin! and demand smoothenin! /nvoice product Ship product 3rac# product information for stales and recalls Perform product returns Perform 6uality assurance

10+ &ana!e Production Processes a+ b+ c+ d+ e+

&ana!e Production @et*or# &ana!e Production Performance &ana!e Production Frders and /n(Process Products =7/P> /nformation Control Production E6uipment E8ecute &aintenance Plans

11+ Provide ?uman Resources =?R> Support a+ b+ c+ d+

%evelop ?uman Resources Ensure Site Safety &ana!e 3eam Relations Plan and dminister Compensation and Benefits

12+ Provide 4inancial Support S.P. J,n Instt#te o5 M,n,'e6ent & Rese,$% Ente$ So+#tons8 J#+!2949

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Study of the BPR and ERP implementation activities in Cadbury a+ b+ c+ d+ e+ f+ !+ h+

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Perform ccounts Receivable Perform ccounts Payable Provide 4inancial ccountin! and Controllin! Support Perform Bud!etin! and Plannin! Plan Capital ssets Perform Cash &ana!ement &ana!e E8ternal Relations Close the Boo#s


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T%!e o0 BPR i1!"e1ent#tion Business process reen!ineerin! =BPR> be!an as a private sector techni6ue to help or!ani,ations fundamentally rethin# ho* they do their *or# in order to dramatically improve customer service5 cut operational costs5 and become *orld(class competitors+  #ey stimulus for reen!ineerin! has been the continuin! development and deployment of sophisticated information systems and net*or#s+ Geadin! or!ani,ations are becomin! bolder in usin! this technolo!y to support innovative business processes5 rather than refinin! current *ays of doin! *or#+

Fig.: Reengineering guidance and relationship of Mission and Wor !rocesses to "nformation #echnology

Business process reen!ineerin! is one approach for redesi!nin! the *ay *or# is done to better support the or!ani,ation:s mission and reduce costs+ Reen!ineerin! starts *ith a hi!h( level assessment of the or!ani,ation:s mission5 strate!ic !oals5 and customer needs+ Basic 6uestions are as#ed5 such as K%oes our mission need to be redefinedL re our strate!ic !oals ali!ned *ith our missionL 7ho are our customersLK n or!ani,ation may find that it is operatin! on 6uestionable assumptions5 particularly in terms of the *ants and needs of its S.P. J,n Instt#te o5 M,n,'e6ent & Rese,$% Ente$ So+#tons8 J#+!2949

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customers+ Fnly after the or!ani,ation rethin#s *hat it should be doin!5 does it !o on to decide ho* best to do it+ 7ithin the frame*or# of this basic assessment of mission and !oals5 reen!ineerin! focuses on the or!ani,ation:s business processesMthe steps and procedures that !overn ho* resources are used to create products and services that meet the needs of particular customers or mar#ets+ s a structured orderin! of *or# steps across time and place5 a business process can be decomposed into specific activities5 measured5 modeled5 and improved+ /t can also be completely redesi!ned or eliminated alto!ether+ Reen!ineerin! identifies5 analy,es5 and redesi!ns an or!ani,ation:s core business processes *ith the aim of achievin! dramatic improvements in critical performance measures5 such as cost5 6uality5 service5 and speed+ BPR is primarily cate!ori,ed asH •

Clean Slate

•

3echnolo!y Enabled Clean Slate Advantages

Technology nabled Advantages

@ot constrained by tool @ot limited by best practice database

4ocus on ERP5 best practices 3ools help structure reen!ineerin!

Retain competitive advanta!es

3ools focus reen!ineerin!

@ot sub$ect to vendor chan!es

Process bounded5 thus easier

may be only *ay to implement advanced

#no* desi!n is feasible

technolo!y may have uni6ue features *here best

reat li#elihood that cost5 time ob$ectives met

practices inappropriate

3he mana!ement #ne* about the e8istin! systems company had+ Cadbury had operations in 1. different locations+ /t had mar#etin! in several different locations =2. depots> and they *ere all hi!hly decentrali,ed+ 3he mana!ement *as loo#in! at *ays to ease thin!s out+ So they #ne* about SP systems and also #ne* that one day or the other they *ould


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have to !o for this+ Company *as on a fast paced !ro*th and that point of time it *as very important to implement the system+ 3he top mana!ement *as very supportive in that+ BPR at Cadbury *as 3echnolo!y enabled and focussed on implementin! ERP system to brin! in chan!es+ 3he e8ercise *as made a "P/ for all ma$or functions and implementation *as controlled by a core team+ BPR *as done from scratch to suit the needs of ERP system and /ndia office *as first to implement this+ 3he e8ercise did not !et much resistance from the employees primarily because of follo*in! reasonsH •

Since5 it *as technolo!y enabled BPR5 processes *ere not chan!ed much and hence people did not have any issues+ /t *as easier to implement this+

•

Noun! employee base of Cadbury *hich is al*ays ready to chan!e for the benefit of the or!ani,ation+

Post BPR e8ercise the three thin!s that company controls areH •

Ran!e availability at the distributor

•

Ran!e availability at the depot

•

4reshness inde8+


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ERP IMPLEMENTATION MET)ODOLO2Y C)ALLEN2ES Cadburys /ndia *as the very first or!anisational unit all over the *orld to implement ERP in its processes+ 3he /ndian subunit *as very e8cited and loo#in! for*ard to these practises+ lso5 Cadburys /ndia themselves too# the initiative to implement ERP as they *ere confident of their manpo*er bein! able to handle the implementation process efficiently  effectively+ 3he implementation process in /ndia *as started from scratch as they *ere the first to implement that in all over !lobal application of the Cadbury+ 3hey tried to inculpate the best practises of the company and tried to build on the stren!ths the past systems in ne* ERP systems+

Cadburys #ne* that for implementation *ill they *ill be standardi,in! the processes in 1. different locations+ People *ill have to !ear up in order to streamline the processes+ 3he pro!ress has to be rapid for the implementation *hich *as not very easy+ 3he !ro*th *ave blo*in! over the developin! countries encoura!ed the top mana!ement to loo# for*ard to the ERP implementation *hich *ould set the base for hu!e information sharin!+ 3he ERP initiative *as to brin! about a complete inte!ration of the ma$or processes in the business+ 3he ma$or processes bein! procurement system5 finance system5 the ?uman Resources and other departments+ 3hese *ere functionin! in a completely decentralised manner+ lso5 Cadburys have four branch operations and 1 manufacturin! operations and each had their o*n systems runnin! in isolation+ 3he finance department *as the only one common to all+ ERP served as an inte!ratin! system and a solution for their then e8istin! decentralised model+ 7hen they *ere implementin! the system5 they inte!rated usin! the finance module first+ /t *as a sta!!ered implementation *ith finance first follo*ed by the other modules+ /n order to implement these ERP processes5 Cadburys had to impart trainin! a fe* of their youn! professionals+ Since these *ere 6uite tech savvy and open to ne* ideas5 overall trainin! period *as reduced+ 3he implementation methodolo!y adopted by Cadburys happened in 1''- and they *ent ahead usin! a bi! ban! approach+ 3hey did the implementation company *ise+ S.P. J,n Instt#te o5 M,n,'e6ent & Rese,$% Ente$ So+#tons8 J#+!2949

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Cadburys had one ma$or e8pectation from ERP ie+ /3 to help the mana!ement *or# better than before *ith the e8istin! systems in place+ /t *ould help increase trac#in! bac#5 for e+!+ *e can find out *ho has #eyed a data and *hat they have #eyed and *hen+ /n order to carry out the ERP implementation5 Cadburys had to ali!n *ith a n e8ternal vendor+ 4or ERP partnership *ith Siemens and for infrastructure mana!ement = ?elp end user des# 4unctions> partnership *ith /B&+ 3he decision for this Siemens *as ta#en centrally at the D" function *e continued on the same so have same systems all over !lobe functions+ /n terms of the visibility achieved throu!h ERP up(to lo*er 3ier levels Cadbury is able to achieveH Ra* materials completely and sales up(to the S"D Gevel+ 4or the suppliers there is one portal is run #no*n as )endor Connect5 throu!h this they have access to chec# the inventory they provide to Cadbury at our plant premises

/nitially Cadburys *ent *ith 4inance and then subse6uently to production and supply chain+ 3hey *ent for a function based bi! ban! approach in /ndia and then implemented the *hole module all across company in span of 1 year so it can be said as bi! ban! as *hole+

/t *as completely top mana!ement driven+ Cadburys have a proper &/S no*+ %ata is entered only once+ 3he entire system !ets updated+ Fne can see the consolidated data from any*here and ma#e decisions+ 4rom manual entries it has become a totally system driven data entry no*+

3he ERP system made a lot of functional chan!es in the system+ Bill material5 automation and inte!ration happened from completely manual process+ Boo#in! of the finance entries5 bill material receipts and inventory !ettin! updated5 3he real time data *as made available to the company *ide function for e+!+ for production function the end of shift data is available5 for finished !oods inventory the inventory levels at all our depots reflects on portal+


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3he ERP methodolo!y implemented by Cadburys can be e8plained on the basis of the !eneral methodolo!y approach ta#en by companies+ 4ollo*in! is the phased approach follo*ed by some leadin! companies+ 3he various phases in this approach are as follo*s+ ?ere5 Cadburys has tried to combine all these phases into a sin!le phase and implemented B/ B@ method to implement its ERP Practises+

Phase1H Pro$ect Preparation ?ire #ey pro$ect members5 /nstall %evelopment system5 3rain internal /3 transfers5 Select systems inte!rator5 Pro$ect Frientation5 /nstall pre(confi!ured client5 Prepare for blueprint phase •

Confi!ure 7?) prototype system

•

%etailed *or# plan

•

Revised cost estimate

Phase 2H %etailed desi!n  re6uirements •

Process

•

Reportin!

•

4orms

Business improvement &easures5 /dentify business implications5 Pro$ect ris#s  opportunities5 lobal application map5 lobal template system5 4inali,e !lobal scope5 Revised capabilities roadmap5 %raft chan!e mana!ement+

PhaseH S.P. J,n Instt#te o5 M,n,'e6ent & Rese,$% Ente$ So+#tons8 J#+!2949

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&aster data conversion5 lobal template confi!uration5 E8ceptions a!reement =statutoryIlocal must dos>5 E8ceptions confi!uration5 Cycle unit testin!5 Cycle inte!ration testin!5 /ssues resolution5 %ocumentation5 Be!in !lobal trainin! material preparation

Phase H 4inali,e trainin! pro!ram5 End(user trainin!5 Readiness assessment5 Production system prep5 4inali,e cutover plan5 Communicate cutover plan5 /nform e8ternal partners as necessary5 %ay(in(the(Gife =%/G> 3ests

Phase-H Production master data conversion5 E8ecute cutover plan5 &onitor process  system usa!e5 Fn(site support5 /ssue resolution5 Communicate on(!oin! support process( $%& update at end of phase

Cadbury laid out a !rand plan for their ERP implementation+ 3he installation of ERP systems of all modules happens across the entire or!ani,ation at once+ 3he bi! ban! approach promised to reduce the inte!ration cost in the condition of thorou!h and careful e8ecution+ 3his method dominated early ERP implementations it partially contributed the hi!her rate of failure in ERP implementation+

3oday5 not many companies dare to attempt it anymore+ 3he premise of this implementation method is treatin! ERP implementation as the implementation of a lar!e(scale information system5 *hich typically follo*s S%GC =Systems %evelopment Gife Cycle>+

But an ERP system is much more than a traditional information system in the fact that the implementation of ERP continuously calls for the reali!nment of business processes+ &any parties involved in ERP soft*are systems are not /3 professionals+ ERP more than automates e8istin! business processes+ ERP transforms the business processes+ S.P. J,n Instt#te o5 M,n,'e6ent & Rese,$% Ente$ So+#tons8 J#+!2949

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3he appeal of the bi! ban! implementation strate!y is that it focuses the or!ani,ation for an intense and relatively shorter period of time than if the pro$ect *ere phased+ 3his often helps address lon!(term resource shorta!es+ /t also condenses the pain and difficulty of an ERP pro$ect into a shorter period of time5 althou!h the pain is typically more pronounced usin! this approach+

3he do*nside of the bi! ban! implementation approach is that the pro$ect is often rushed5 details are overloo#ed5 and chan!es to business processes may not be the best ones for the or!ani,ation+ nd5 as mentioned above5 the pain is often more severe due to the hectic nature of this approach+ &ore often than not5 my e8perience has been that pro$ects that implement an overly a!!ressive bi! ban! approach are more ris#y and result in less satisfaction *ith the system:s abilities to meet important business re6uirements+ 3he other end of the spectrum is to follo* a slo*er5 phased approach+ 3his can either by functional business area or !eo!raphy+ 3he appeal here is that is allo*s pro$ect teams to ta#e their time in the plannin!5 customi,ation5 and testin! of the system *hile continuin! *ith day(to(day $obs+ 3he do*nsides are that these types of phased pro$ects often lac# the ur!ency and focus of a bi!(ban! pro$ect+ /t can also lead to Kchan!e fati!ue5K *hich can cause employees to become burned out on constant chan!e+ /nstead of !ettin! the pro$ect over *ith in a shorter period of time5 these pro$ects involve constant chan!e over lon!er periods5 *hich can be drainin! to employees+

3he Cadburys Supply chain net*or# is as sho*n+ ERP has brou!ht about modifications for the better in these processes+


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BUSINESS BENE(ITS O( BPR AND ERP IMPLEMENTATION &eetin! the mar#etplace demands 7e are currently in an environment *hich has drastically chan!ed from a pull system to a push system5 than#s to the increasin! interest in entrepreneurs brin!in! in the same products and tryin! to meet the same needs durin! the era *hen demand *as more than supply+ Before *e reali,ed it supply became more than demand because of increasin! number of competition+ Cadburys also faces the same situation+ 7or#in! in the same *ay as before is certainly not a solution and *ill lead to the erosion of the company+ ?ence it is a proven fact that chan!e has become mandatory because of the macroeconomic factors !overnin! the mar#ets+ 3he customers today *ant more for less+ /f you do not provide it he is ready to !o for another supplier *ho can and *ho *ill in order to ensure your do*nfall+ 3he competition is intense and its a red ocean+ 3he customers are also demandin! variety and fle8ibility at the same time *hich demands more from the manufacturin! side and the companies have to be on their toes to service customers *here loyalty is a lost *ord+ Retention of customers has become a !reat strate!y in itself no*+ Fr!ani,ations have become comple8 in order to suit all these needs+ /n such a buyers mar#et5 the implementation of BPR and ERP has its benefits *hich have become visibly evident+ /mprovin! the functional efficiency of the or!ani,ation at lar!e Every company is movin! from its conventional system to an inte!rated fle8ible system capable of meetin! future needs and the future almost al*ays is very near and is mar#et driven and one has no control on the same+ 3he companies that havent chan!ed have been faced *ith hi!h overheads compared to those that have become *ell coordinated+ 3he overheads are due to the presence of several non value addin! activities that consume resources+ @o* companies are becomin! leaner =reducin! utilities cost> and meaner =reducin! manpo*er cost>+ 3he initial setup in the company had several informal systems operatin! *hich increased the lead time and also the time to mar#et+ 3his led to several disappointed customers and the remedy to this in the short run has been to increase the inventory and hold hi!her stoc#s so as to reach hi!her customer satisfaction level and service level+ 3his has increased the inventory holdin! cost and loc#s up money in the system+ ?ence this causes cash flo* problems+ 3here is lac# of accountability *ithin the or!ani,ation as problems S.P. J,n Instt#te o5 M,n,'e6ent & Rese,$% Ente$ So+#tons8 J#+!2949

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cannot be traced bac# and this traceability issue leads to fin!er pointin! and /R issues *ithin the or!ani,ation+ 3here are times *here the plans !et inflated because of inefficiencies built in the supply chain *hich e8pect that the company *ill not be able to meet the full demand+ 3his disbelief leads to the bull *hip effect and increased cost and for a company li#e Cadbury dealin! *ith perishable items it becomes an imperative to attac# this issue+ 3here are schedule mismatches and the company has 2. depots each functionin! as a silo and this *ill only !o on to amplify the impact+ 3his leads to constant fire(fi!htin! *hich leads to employee frustration and confusion+


2"


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Bene0its s!eci0ic to C#&ur% Cadbury had operations in 1. locations and 2. depots and all of these *ere hi!hly decentralised+ 3he mana!ement *as loo#in! at *ays to sort internal problems and this is *here SP had come to the rescue

•

Cadbury *as on a fast paced !ro*th and could not continue *ith the e8istin! systems and the pace *as too slo* due to added inefficiencies do*n the chain+ BPR implementation handled all the issues and added efficiency and !uided the fast paced !ro*th

•

Cadbury standardi,ed the processes *ithin the 1. locations thereby benchmar#in! the best practices in the locations and havin! a mar#ed increase in the efficiency by brin!in! all the locations to the same pa!e and the best pa!e+

•

3he implementation of ERP brou!ht in a ne* *ay of *arehouse mana!ement system and brou!ht in structure to branch offices and the depots

•

3he manufacturin! in itself had 1 operations and each *as operatin! in a silo+ 3his had increased the *or# in pro!ress and the inte!ration of the processes has done *ell for the company

•

7hile implementin! the ERP systems5 the company has built it up on the past stren!ths of the company thereby not losin! out on its competitive advanta!e and at the same time saddlin! itself up for a fast paced !ro*th

•

3he initial implementation too# time and then the successive implementations too# lesser time and cost and there is a hu!e advanta!e in savin! cost *hile in the implementation phase itself

•

3he reaction from competition does not matter in this because this is not a chan!e that *as advertised to the mar#et+ 3his is an internal process restructurin! and *as a *elcome chan!e *ithin the company *hich badly needed the chan!e

•

3he company also has built in a robust re!ular feedbac# system to monitor the chan!es and chec# if they !o accordin! to the initial plan+ 3he entire implementation


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is cross functional and hence it is important that there is a hi!h increase in the efficiency+ •

3he ERP vendor *as also selected from amon! the best in class vendors *hich helped the process occur in a streamlined fashion and avoided any possible chances of hiccups durin! the initial implementation phase+

•

3he system has also been deployed up to the vendors+ 3hey have a portal called vendor connect *here they can see their inventory movement and ma#e plans accordin!ly+ ?ence the restructurin! happens not only internally but also across to the supplier *hich *ill add on to the benefits that are accrued

•

/t *as considered a lo' cost and high result implementation *hich by itself hi!hli!hts the success and the benefits+

•

3here is increase transparency in the or!ani,ation thou!h there is authori,ation involved+ 3his helps to #eep the people in the same pa!e and ensures proper inte!ration

•

3he company achieved ;0 automation in processes and has not eliminated any process specifically

•

3he company has a proper &/S =&aterial /nformation System> because of this implementation and the entire process is top driven

•

3he $obs *ere classified into comple8ity base and the hi!h comple8 $obs *ere tar!eted and automated+ @o manpo*er elimination too# place+ /nstead the company hired manpo*er

•

Bill material5 automation and inte!ration happened from completely manual process+ Boo#in! of the finance entries5 bill material receipts and inventory !ettin! updated5 3he real time data *as made available to the company *ide function for e+!+ for production function the end of shift data is available5 for finished !oods inventory the inventory levels at all our depots reflects on portal+

•

 ne* stoc# accountin! system has been put in place *hich ta#es care of freshness of the product


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Le#rning #n reco11en#tions 0ro1 C#&ur% i1!"e1ent#tion •

3he transition challen!es the comfort ,one of individuals5 teams5 business units and the or!ani,ation5 built over a period of time+

•

/t is e8tremely important to !enerate ener!y *ithin the team members and creatin! o*nership in the or!ani,ation+

•

/t is important to have a top(driven implementation especially for a company that is focusin! on a !ro*th of 20(0

•

7hen the top mana!ement feels the importance and the need for the implementation of the system5 the implementation is much easier as apropos to the situation *here the C4F has to !enerate the idea and !et the approval for completion of the pro$ect *ithin the specified timeline and the bud!et

•

3he support of employees is very essential in the implementation thou!h it is top driven+ 3here has to be a clear communication of the need and the benefits of the implementation and the employees have to feel the need of the same

•

3here has to be clear settin! up of accountability and o*nership in the implementation sta!e and a special team has to be set up for re!ular monitorin! and control

•

3he implementation can be tailor made to fit the !ro*th plan+ ?avin! only the necessary modules *ill also reduce cost and pace up the implementation process

•

Startin! the inte!ration *ith the finance module has been a time tested and proven implementation strate!y that *or#s almost every time

•

ERP serves as a one stop solution *hen an or!ani,ation shifts from a decentrali,ed model to a centrali,ed lean model *here the entire or!ani,ation is ali!ned to the vision and mission of the company


20

Study of the BPR and ERP implementation activities in Cadbury •

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7hen inte!ration ta#es place it is *ise to retain the best practices across the departments and build the implementation on the stren!ths of the best practices so as to retain the competitive structure5 inte!rate functions and also become best in class

•

Proper trainin! has to be !iven to the employees durin! the implementation sta!e and monitorin! has to ta#e place in order to ensure that the implementation has !iven the desired results and that the user acceptance is ensured because of the ease of access and simplicity of the process

•

Several companies do a bi! ban! in one area and follo* it up a !eo!raphical deployment of the same after testin! the success+ 3rial runs are very important

•

Seldom such activities are ta!!ed as internal process reen!ineerin! and are #no*n only *ithin the or!ani,ation and hence do not attract reactions from the competitors immediately !ivin! a head start for the pioneers+ Cadbury *as a pioneer in this case

•

3here has to be a proper reportin! and documentation system in any or!ani,ation+ 3his can be achieved by the implementation of ERP because it automates the reportin! and documentation is available in electronic media

•

radually it ma#es sense to inte!rate vendors also so that the entire structure in and around the or!ani,ation !ets leaner+ /n the demandin! environment lu8ury *ill soon become a necessity and it is important to #eep improvin!

•

/t is essential to loo# at total cost of o*nership and identify if the implementation *ill yield results+ 3he study can be done usin! @P) or paybac# period analysis

•

ERP most of all !ives a transparency in a system that facilitates overall !ro*th and empo*ers the people and motivates them as they #no* *hats happenin! in the or!ani,ation+ 3ransparency brin!s in inte!rity+

•

/t is essential to alter the #ey performance indicators of the employees and add the implementation success to the indices to ensure even participation and to ans*er the O7hats in it for meL 6uestion that arises in the minds of those people *ho have to spend additional time out of their *or# for the implementation

SP Pro$ect has to be analy,ed from the total cost of o*nership perspectiveH S.P. J,n Instt#te o5 M,n,'e6ent & Rese,$% Ente$ So+#tons8 J#+!2949

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Cadbury Success

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