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During this time, consumer packaged goods companies operated in a global marketplace that was highly competitive and commoditized. These organizations need to work smarter, perform better and make faster, wiser decisions than ever before. Dabur is no exception. "Nearly five years ago, Dabur clearly identified these challenges and set out to outpace its peers in the industry in terms of revenue and profitability growth." spokesperson, Accenture.
Outsourcing IT operations. Dabur realized the significant commitment of resources and time that the ongoing management of its IT operations, including its core ERP system would entail. Given the success of Accenture's strategy and implementation efforts to date, coupled with the strong reputation Accenture has achieved in the application and infrastructure outsourcing markets, the company decided to outsource its IT management to Accenture for 10 years-marking one of the first IT outsourcing agreements to be forged by an Indian company. Dabur gained the flexibility of being able to focus on its core capabilities while realizing increased value and lower costs through improved performance.
In addition to managing the client's information technologies, Accenture continues to be involved in helping Dabur achieve operational excellence in a number of areas. The two companies are collaborating to extend ERP implementations in new geographies to support international growth. They are jointly examining strategic opportunities such as mergers and acquisitions. And they are working together to explore the creation of even greater value through the development of business cases and diagnostic capability assessments.
A project of $12 million spanning over 12 years. Dabur was aware that restructuring of processes and buy-in from all the functional managers would be required to make ERP a success. For the purpose, Dabur appointed these managers as process owners, giving them full autonomy for their respective processes. Furthermore, their work was made a key measure in their performance appraisals.
A risk analysis was carried out through ASAP to assess project completion time. Employee's considerations were captured through internal surveys towards IT system.This was carried out both during pre-implementation and post-implementation phase.
As a result, the IT team focused more on training component; they ultimately provided training to more than 2000 employees, several times the original plan.
This increased employee comfort levels with the process changes and also the IT team was able to communicate pros of the project.
For the purpose of training, ordinary users and power users (extensive users) were identified. A unique Accenture model was adopted whereby training was provided to the power users first, who in turn trained the ordinary users.
All these measures resulted in very smooth implementations. Implementation of SAP R/3 started in 2005 and went live as per plan in 2006. Also in 2006, Dabur began bringing its major distributors online for entry of secondary sales data into the ERP.
High performance delivered
With Accenture's help, Dabur has implemented strategic and operational changes that have led to a much higher level of performance. Dabur is now one of India's fastest-growing companies. Annual sales are up by 17 percent. Year-over-year profits have increased by 40 percent. The company's new sales force structure has significantly enhanced channel throughput and productivity.
Further, the new sales and distribution strategy has enabled the company to expand distribution by 19 percent and add approximately 80,000 sales outlets, bringing its total to 630,000. This expansion has had a direct effect on Dabur's bottom line. Dabur estimates that six percent of its 14 percent revenue growth in 2007 is due to the new retail strategy alone. Analyst HSBC estimates that about 30 percent of the revenue growth was due to increased distribution reach.
The successes to date have laid a foundation for continued excellence. By year-end, Dabur expects to install point-of-sale software to support faster and more accurate decisions on everything from inventory levels to new product roll-outs at 500 additional customers. Accenture's ongoing management of Dabur's IT operations has also generated significant benefits. Most notably, it is allowing Dabur to leverage IT as a strategic asset and is ensuring a constant availability of IT talent, regardless of business demands. For example, during Dabur's acquisition of Balsara (a manufacturer of cosmetics, hygiene products and home products), the outsourcing team provided the deep skills necessary to carry out the phased merger of the two companies' core enterprise systems.
With all of these efforts aimed at achieving operational excellence, Dabur is poised to realize its aggressive revenue growth target. Analysts are taking notice of Dabur's ambitions, and its new capabilities that will bring these ambitions to life.
The annual performance improvements over two years are shown below.
Services provided by other groups or companies
FreeMarkets FullSource and QS software were used to strengthen its procurement process and for deploying Spend Visibility solution.
Dabur's procurement base is extremely diversified because of the varied nature of our products, brands and franchise. Usually, companies apply the 80:20 rule to sourcing i.e. the management concentrates on 20% items, which involves 80% of value spent. With this tool we intend to dissect, track and optimize 100% of our spend using the FreeMarkets Solution that will help us make superior management decisions," said Jude Magima, Vice-President (Supply Management), Dabur India Ltd.