Erp implementation at maruti suzuki ltd
Maruti Suzuki ltd. was established in 1981 in India as and since its establishment Maruti Suzuki ltd has been leader of the Indian car market. It is a subsidiary of its parent company Suzuki Motor Corporation of Japan. Maruti Suzuki Ltd is the largest selling passenger car company in India and controls more than 45% of the Indian car market. The company is headquartered in New Delhi. On 17th September, 2007 Maruti Udyog Ltd was renamed to Maruti Suzuki Ltd. It has two manufacturing plants in India; one is in Gurgaon and the other is in Manesar. Both units when combined can produce around 500000 units per annum. Till now the company has a portfolio of 15 passenger vehicle. It is listed on BSE (Bombay Stock Exchange) as well as NSE (National Stock Exchange).
What is ERP
Every automobile company today has a very large amount of data to deal with. If the data is not integrated and is not available in consolidated form and at one place, it is very difficult for the users to access the data. ERP (Enterprise Resource Planning) is a basically a software tool for integrating the business as a whole with an aim of effective use of the management resources to improve the efficiency and working of the organization. It is a tool that integrates all the divisions and functions of the organizations into a single software program which runs on a single database and facilitates information sharing and communication among the various departments of the organizations.
Need for ERP
Every automobile company today has a very large amount of data to deal with. If the data is not integrated and is not available in consolidated form and at one place, it is very difficult for the users to access the data. In today’s scenario, it is very important to share the data among the various divisions and departments of the organization in order to improve the efficiency and working. At every point or juncture, the information can be viewed and can be accessed. ERP is also used to integrate the value chain activities in the automobile industry. Enterprise Resource Planning also plays a major role in managing the inventory as it is one of the most important aspect in the automobile industry. Operational excellence is also achieved with the help of ERP. Thus, ERP has now become a necessity and need in the automobile industry and in companies like Maruti Suzuki ltd.
Maruti Suzuki Ltd. uses
Pre – Implementation
Before implementation of the ERP, the company used to depend upon its home grown, disparate systems to manage its business. But these systems were inefficient and were not able to communicate with each other and thus required a lot of manual work like entering data multiple times. And it was very difficult for the staff to generate the results and reports. There was a lack of control over processes. The company also added four new business sectors in 2002 which also required constant attention and human intervention and thus making it difficult to manage the system. Also, before implementing ERP company faced problems like poor information quality and huge turnaround time. There was no real time access to information which made it difficult for the company staff to access and obtains the latest, updated and correct information.
Strategies for ERP implementation
Maruti Suzuki’s Chief General Manager Rajesh Uppal said that the company was looking for an expandable and a flexible system that can be easily managed. Thus this will lower down the complexity of the system (IT environment) and also would reduce the dependence on some people to handle and manage the system. By implementing ERP there will be a single standardized Oracle platform and thus will also help the proper scaling of the system. The company adopted a phased migration strategy from its old legacy systems to the Oracle E – Business Suite.
There was a smooth transition from the old legacy systems to the newly adopted Oracle E – Business Suite. The company selected Oracle Consulting to determine the company’s requirements, to design the system, to develop the project plan, to deploy the software, to manage the parties involved and finally to provide the three months post – implementation support to the company. The training programs were also designed for the employees. Under the training programs the user manuals were provided. There was also Train the Trainer program and Train the super users program under the Training programs.
The company observed that with using the old multiple systems, there was lack of control over the data and information quality and processes. It was difficult to manage finances and the divisions lagged behind each other. But with the implementation of the E – Business Suite, Maruti Suzuki was able to standardize on a single financial management platform. Standardization helped the company to keep and maintain tight control over the Accounts payable, accounts receivable and comprehensive general ledger. Also the efficiency improved and there was less confusion with the introduction of the standardized data formats and processes. Rajesh Uppal (Chief Manager - IT) said that the completed the year end close on time without any hitch.
The company has been using Hyperion software for the last two years. It has been used to analyze the budgets across Maruti’s nine subsidiaries. It also helped the company to conduct financial reporting in compliance with the GAAP (Generally Accepted Accounting Principles) in India. The system is integrated with the Oracle Financial and is now being used by 10 (approximately) budgeting staff in the company’s finance department. It has helped the company to improve their forecasts and also enabled Maruti to quickly respond to the changes in the market conditions thus enhancing their competitiveness. Hyperion can be easily integrated with the Oracle Financials Module.
Oracle Purchasing was implemented by Maruti to handle the procurement of the services, goods and indirect consumables. Before implementing this Purchasing system, the company’s subsidiaries either depended on spreadsheets or used the elementary or fundamental system to handle the process thus leading to rise in costs and excess of inventory. The major changes this system brought in the company was the cost reduction and better inventory management. It also helped to reduce the number of vendors thus reducing the costs. An automated workflow sends purchase orders along the chain and keeps the staff aware of the procurement activity. It has provided working staff the capability to track the process from order to payment.
HR Workforce Management
Maruti was quick enough to discover that the systems they were using were not able to manage the employees. Thus it felt the need of a single integrated system that could easily help them to manage the human resources. After the implementation of the Oracle Human Resouces module, Maruti observed that it had a better control over the functions such as leave and compensation management, payroll, recruitment and training and staff development. As the information is stored in a single database, the system enabled the staff to access the entire history and the details of the employees. Oracle self – Service HR was also implemented which freed the HR staff from elementary duties (like changing details and addresses of employees). Thus, it helped Maruti to hire good quality people.
After the success of the HR, Procurement and Financials modules, the company can implement the Oracle Advanced Supply Chain Module and Oracle Enterprise Asset Management. The company can integrate more of its processes with ERP systems. This would help the company to access the real time information across all the different departments and divisions of the company.
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