The story started with the joint venture between Hero Group Indias Leading bicycle manufacturer and Honda Motor Company of Japan (which has pioneered all sections of Automobile industry), and became world’s single largest two-wheeler company. On 19th January 1984 the JV came into existence which gave India a revolution on two-wheels and was made famous by Campaigns like “Fill it- Shut it-Forget it” campaigns has made the Delhi based group capture more than 50% of Indian Market. Hero Honda now supplies its products through more than 500 dealers and more than 700 service points, it has a supplier base of more than 240 for its parts and subassemblies. Now the challenge ahead of Hero Honda is cutting down the waste out of its supply chain and meeting the fast changing dynamics of the modern Indian Markets. To reach the heights it has Hero Honda has successfully leveraged the Information Technology Advantage in the recent times.
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Reasons for ERP implementation
The company was having a legacy system which was having a high failure rate, the existing in-house system was not updated well and was in no position to meet the expansion which Hero Honda was planning. It was getting obsolete, the in-house tailor made systems were working on different platforms developed to meet their needs of working, only some reports were generated and the MIS basically resided on excel sheets only. Information thus was fragmented and the authenticity was doubtful. Even the patchwork done over the time made the systems loosely integrated across different functional domains. Above shortcomings recalled for the need of a stable, uniform, consistent system which can cater the need of future markets. Following were the objectives for going for a Stable ERP system:
IT should be the Part and Parcel of the Hero Honda.
Migration from a slower and questionable network to a faster and more reliable network.
Aligning IT with the business.
IT to be used as a strategic business tool.
To go for a common systems across the organization.
Integration between all the systems.
Improving business process to cover the entire supply chain.
A standard solution which can overcome the drawbacks by the in-house legacy systems and which had a clear road map for the future including conducting business over the net.
To Partner with a technology vendor capable of taking them forward as and when the business expectations will increase.
IT Infrastructure at Hero Honda
Company is connected over 3 major LAN n/ws covering corporate office in new delhi , two manufacturing plants, and 21 zonal offices through WANs.
VPNs and VSAT connectivity is used for connecting zonal offices with corporate office.
Hero Honda uses 10/101Mbps ethernet switched technology with optical fibres and CAT 5.0 cables.
Switches from IBM, CISCO and 3COM and IBM RS 6000 servers for SAP applications.
For Lotus Notes IBM’s Netfinity servers are used
Major Hardware Backup is by IBM.
Management’s objective behind implementing ERP was to integrate various functions and control its operations. Hero Honda implemented SAP R3 on 1st February, 2001. Main Modules used by Hero Honda are production, materials, finance, marketing, assets, quality, sales and distribution. Siemens Information Systems was the implementation partner for this roll out, it helped in getting a high level of Data Integration. Current Scenario is that nobody asks any other department for the information, one can log into the system and see reports online. Significant amount of cost reduction and efficiency is witnessed by the employees, a better cost control measures are implemented with the new system. It has helped calculating the consumables,fuel and power cost, tool inventory cost, plant overheads etc. and they become ready for the future CRM and SCM implementation.
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Role Of SAP
SAP’s selection was because of the overwhelming presence of SAP in the automotive sector and the customer reference too was addressing strongly about SAP’s ability to address the needs. The project took off by imparting one day training sessions to over 135 managers explaining the project roles of core team members and users. End users were involved at various levels and they adapted to the new system well. At the beginning there were various problems but the help desk which was a 24hours online attended the issues promptly resulting in the streamlining of the operations in 15 days. Hero Honda was profited from services delivered remotely by SAP consultants in Singapore and Software developers at Germany ensuring that that any issue is dealt rapidly and efficiently, and the pace with which the issues were dealt was impressive from the management’s perspective and also in the real sense. The result of all this was that the project was completed in a record time of three months. Implementing the latest mySAP CRM and mySAP SRM capabilities in such a tight framework was an ambitious goal of the organization.
Automating Supplier Transactions with the mySAP CRM and mySAP SRM began with the pilot testing in 2004, and the result is that the top 125 suppliers accounting for 95% of its supplies are using this supplier portal which is a self service portal in real time. They can now see the status of their orders, invoice, shipments and they can also see the new delivery schedules as soon as they are processed by Hero Honda production. They can also confirm things like whether they can supply with any variations in order or confirming whether they will be able to meet a certain delivery schedule.
Hero Honda also implemented a customer portal as a part of its End To End process integration objective as a feature of its my SAP CRM. As said by one of the managers, “our dealers place their orders once a month, typically a dealer can order several hundred motorcycles , as well as spare parts. So every we get our orders in and we consolidate them on Saturday, and on Monday morning our suppliers are all receiving our delivery schedules, directly from our production planning systems”. As the order processing system is now fully automated, Hero Honda saves approximately 4 days which translates into an inventory savings of about 15% which results into a substantial cost savings. Automation also increases the organization’s ability to be responsive to its dealers.
Many a times it happens that the dealers want to revise the orders which are already in process, they might do this to account for a sudden change in customer demand- for instance their customers might ask for a new color or a different model, for these revision changes can be done on the coming Friday and be pretty sure that the entire shipment will go out as scheduled for the following week. Customers appreciate this kind of responsiveness and it’s just what they want and they need in order to take advantage of its fast growing market.
Hero Honda has opted for SAP HR module which has enabled employees to assess all information about their Salary, Tax, Level Loan etc. it has also developed a portal where employees can exchange idea, read information and would get access to the articles developed by HR department and will also caome to know about the Latest News and the information circulations etc. they have also planned to use the intranet for internal and external recruitment, assessment and appraisal purposes.
Disrupting in IT infrastructure could spell disruption in business operations, taking this into consideration the company has been constantly upgrading its information security systems to keep in pace with its expanding IT Network, as in an automobile industry all the processes would hamper if the systems fail. There is a clear cut demarcation within the organization employees regarding who is authorized to use which level of information and this all has been done to maintain the data integrity and accuracy. Systems are made secured from any type of intrusion and is protected at all fronts. With the expanding production facilities at DARUHERA plant to over 4 million units per annum it has over 1600 desktops and has created 2000 email id’s as email communication is considered to be the back bone of any such organization. The company has deployed the Total Virus Defence system which is now upgraded to Active Virus Defence System around two years ago, it is using group shield for Lotus Notes which is a messenger service at the intranet of Hero Honda and NETSHEILD for NT and Windows 2000 servers.
Benefits To HHML
ERP has brought major changes in the organizations which have all synergized the production facility at the two manufacturing units of HHML. ERP has improved the quality , access and usage of transactional Data and systematically computed multiple entries. Besides there is now no need of any manual entries and operational processes are improved at various stages. Order processing is standardized across various functions and real time information on product cost, profitability analysis and dispatch and production status was made available too. The main reason behind the success of their SAP implementation was that it was taken as a BUSINESS project and not as an IT project and different functional heads and module heads were also involved in the project. Apart from this deployment of the relational database like Oracle and Ingres helped in consolidating data at one place and made it accessible to all authorized users. Hero Honda has also upgraded to a later version of the mySAP SRM and this will usher in added functionality. This will help them to do more strategic partnerships. They will also implement self service procurement for indirect materials and will extend the supplier portal by implementing a vendor managed inventory functions, as well as advanced analysis from the data warehousing capabilities of SAP Business Intelligence model.
Faced with the growing market demand and inefficiencies in its supplier order processes, Hero Honda the world’s largest two wheeler manufacturer has chosen mySAP SRM solution to integrate and automate its large and complex Supply Chain. Its objectives were speeding up and automating the supplier order processing, synchronizing the customer orders with supplier schedules. Results of the implementation can be proven from the facts that the deliveries of the suppliers reached an accuracy levels of 98-100%. Better responsiveness to customer changes and also online communications to the suppliers were integrated and traceable. Inventory planning improved making a reduction of 15% inventory carrying cost.
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