That’s not to say Sheela Foam wasn’t doing well. According to industry reports, the manufacturer of polyurethane foam products owns 40 percent of the Indian PU foam market and is well ahead of its competitors. But until recently its very  size hobbled it.

Business case: Sitting in their headquarters in Ghaziabad, Sheela Foam’s management was having the hardest time pointing their 2,000-plus strong organization (with 13 manufacturing plants) in one direction. “Over time, each department developed their own set of performance parameters,” says Pertisth Mankotia, head-IT, Sheela Foam. “We realized that we needed a system that could help us align our performance parameters and achieve an overall business objective.” Another part of the problem was that because the company’s reporting and reviewing mechanism worked on a monthly basis, it made course corrections possible only at a month’s interval, says Mankotia. Which meant that whatever solution Mankotia came up with needed to allow the company to review its performance at a higher frequency.
It is crucial for Sheela Foam to monitor its operating margin because of its high dependency on its primary raw material: polyol. According to a CRISIL analysis of its business, Sheela Foam’s operating margins were under pressure in part because of fluctuations in polyol prices, which are linked to volatile international crude oil prices and foreign exchange rates. To deal with the problem, Sheela Foam’s management adopted an approach called the Theory of Constraints, made popular by Dr. Eliyahu Goldratt in his book The Goal. “The Theory of Constraints provides focus in a world overloaded with information,” says Mankotia. “It helps organizations by focusing on a few issues: the constraints to ongoing profitability. The Theory of Constraints focuses on the ability of an organization to achieve its goal by improving its single, but most important, constraint.”

Challenges: For Sheela Foam, those constraints boiled down to four parameters. One of these was throughput, the difference between unit sale price and unit variable cost. “We realized we were not able to keep up with the competition because we could not assess the margin at which our products were sold,” says Mankotia. “This acted as a major constraint because we could not decide which product should be given priority or if pricing needed to be changed.” Aligning the entire organization to focus on margins was the solution.

Project: Faced with this challenge, Mankotia could have decided to implement a complex collaboration project, linking various departments and installing a monitoring system. But he settled on a much simpler and more elegant SMS solution. Using their in-house ERP, the IT team created a system that sent every employee daily and weekly reports via SMS. It included the throughput generated during that week, the company’s growth over last year, material dispatched the previous day, and outstanding orders, among others.
Today, the dissemination of that data allows Sheela Foam to make better calls and stay on top of its margins. “The throughput for each transaction is calculated at the order level, so that orders that generate throughput below a defined threshold can be put on hold,” says Rahul Gautam, MD, Sheela Foam. “This helps us take corrective and preventive steps faster.”
It also allows management to highlight cases that generated low throughput. And it motivates employees to realign their focus to controlling margins, and thus, the bottom line of the business. “The SMS brings everyone on the same page by providing a clear picture of everything that happened up to yesterday and where we are today,” says Mankotia. “We understood that ‘measures drive behavior’ and thus we aligned all our measures accordingly. These SMSes keep everyone on their toes,” he says.
“Today our entire sales staff — and the senior and top management — are updated everyday at 6 AM,” says Gautam. “Some people call it their morning alarm,” adds Mankotia smiling.

Benefits: Introducing a higher level of awareness is bringing in better returns for the business. After the Rs 5-lakh SMS project was implemented, Sheela Foam’s average weekly throughput increased from 101.5 lakh to 272.9 lakh; a 168 percent growth. That drove the company’s turnover up by an impressive 45 percent. The constant monitoring at multiple levels also reduced the company’s operating expenses by 5 percent and upped its delivery rate from 76 percent to 89 percent.
This healthy operating efficiency is one of the reasons credit rating agency CRISIL recently upgraded Sheela Foam’s rating.
“Monitoring throughput has enabled us to increase our profits and market share. It has helped us to identify weak areas both in market and product terms, which are now the main focus areas for improvement. We have seen huge growth because of focused weekly monitoring and a strong daily-update mechanism,” says Mankotia.

Read more Indian CIO Case Studies of efficient usage of SMS for enterprise purposes:

SMS Enables Hero Honda Deliver Better Customer Service

LG’s Boosts Post-sale Service with SMS

The Person Behind It

Pertisth Mankotia

Head-IT, Sheela Foam

The SMS brings everyone on the same page by providing a clear picture of everything that happened up to yesterday and where we are today