Emami Develops a SAP-Based Solution For Better Demand Management
A case study on VSAT in FMCGReader ROI
Executive Summary
As winter approaches, the Indian market for personal care products undergoes an unmistakable surge. What is harder to say is how big that surge is, how fast it will come and how slowly it will recede. But with increased competition that data is exactly what sales and marketing decision-makers need - and they need quickly if they are going to make a difference.
"[During winter], our fastest selling products are Emami Boroplus and Chyavanprash. Their demand goes up almost 10 times," says Vimal Pandey, VP of sales and marketing for Emami. If decision-makers don't know what and where the demand is exactly, they can't tell how much more - or less - to produce - or where to move goods. The potential result is every FMCG man's worst nightmare: a market in full demand that cannot be supplied. At Emami, Vikram Saxena, GM-IT, saw a way to tackle the problem. He planned a dynamic SAP implementation that would connect six Emami plants and 25 depots to the company's headquarters in Kolkata and keep decision-makers informed continuously. "Any modern FMCG company that wants to keep abreast of the various market dynamics to remain competitive, needs IT systems that match business needs, says Saxena.
Case Study Highlights
- Emami started producing fairness cream for men after a survey showed that 30 percent of whitening creams produced for women was being used by men
- The amount men spend on grooming products is expected to rise 24 percent over the next five years to Rs 1,280 crore.
- In an industry that grows an average of 30 percent a year, Emami grew a whopping 71 percent.
- The market has been growing on an average of 30 percent every year
Saxena felt the SAP project was imperative if Emami wanted to ensure that it had an edge over its competitors, and especially if it wanted to respond quickly to what is viewed as an extremely dynamic and competitive market. Emami, says Saxena had implemented an Oracle/D2K based mini-ERP legacy system. It was never updated online, so there wasn't sufficient information at a centralized level.
The Rs 5-crore project kicked off in January 2006. The project was named Udaan, which translates to 'soaring to new heights' and reflects, says Saxena, the spirit of Emami. For nine months Saxena and his team of 16 readied the organization with the help of Wipro. Apart from setting up the SAP modules, he needed to connect the plants and the depots to HQ using a combination of VSAT and leased lines. The IT department rolled out their SAP modules in one swift move. Six plants and 25 depots spread across remote locations like Solan (population 35,000) in Himachal were plugged in and the switch thrown.
The big bang rollout, however, wasn't appreciated everywhere. One depot 
head, for instance, feels that the company could have started with a soft launch and then slowly moved across their markets. Saxena, however, had his own set of challenges. A quarter of his team quit during the course of the project. "In a project like this, you need to have the same people running from beginning to end," says Saxena. "The loss gave us a hard time." Among the primary challenges Saxena and his team faced was changing the minds of members of the management cadre, he says. They needed to convince everyone that the new solution would make life easier. To do this, Rajan's team took a two-pronged approach. The first was an internal publicity campaign. Getting top management involved in driving the project and resolving business issues helped to a large extent. He backed up the campaign with training.
In the meanwhile however, project Udaan has added tremendous value to the company's global marketing and sales functions. The decision makers now have sales statistics available instantly, ensuring improved sales planning. In addition, there are better controls on pricing, the timing of new schemes, the level of discounts, credit checks and customer outstanding. Quantifying these benefits is harder. However apart from the 'oneness of information', which include stock availability across the company and online profit and loss statements, the project has contributed to the company's growth. In an industry that grows an average of 30 percent a year, Emami grew a whopping 71 percent. Success isn't slowing down.
The Person Behind It
Today, master data is created directly at HQ. This provides us with crucial data to enable production and supply planning.
It took a long time for information to flow in HQ. This meant less time to plan a season and we are in the business of seasonally purchase products.
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