Study Of Sap Implementation Methodologies

Published Date: 02 Nov 2017

1. Introduction

Information technology has been the critical success factor for several organizations from different sectors. Increasing competition and the sluggish markets have made it essential for companies to optimize their internal systems. In this era of modern technology every organization is focusing on organizing the Supply chain & Customer Relationship Management. Organizations are forced to redesign the business processes regularly. This report focuses on Breweries and Distillery sector of India.

With the constantly growing and changing demand of the market, every company pays more attention on the fundamental principal for success and act accordingly. These fundamental principles for success are:

Customer is happy when goods are available in the right time at the right place and for the right price.

The company must be flexible to adapt to changes in demand patterns of the customer base.

Shorter Lead time and procurement cycle, thus freeing up the Working Capital for important investment.

Several ERP suites and tools that are available in the market helps us to meet all of these Challenges. They operate as a part of the Complex economic network and respond effectively to market demands. Though they are Complex and costly ERP provides the organization with proper integration of different processes, follows best business practices and standardizes all the processes.

Modern systems in Breweries & Distilleries sector respond to changing demands, which means they are capable to do more than just control the flow of goods and report sales figures. They are capable of the following:

Complex processes like forecasting the consumer demand by taking into account the information about space and capacity of the supply chain.

Price optimization, procurement, logistics, distribution processes, goods control processes and other special forms of management.

Integration of all possible distribution channels and proper workforce management which helps the organization with proper organization of Internal System.

Increased transparency about current revenue, sales, and information about inventory is a crucial success factor for any organization. In a given situation appropriate action can be taken only with valid, up-to-date and transparent information. This paper focuses on how ERP suites especially SAP supports the organization in the Breweries and Distilleries sector of India, with the key challenges they face in streamlining, accelerating processes and also tapping potential for expansion and analysis.

2. Research Objectives:

Study of SAP implementation methodologies.

Study of how SAP implementation plays an important role in the Breweries and Distilleries sector.

Study of Business Processes in Breweries and Distilleries sector and its integration with Information Technology.

3. Nature and Scope of Study:

In this project, I have made an attempt to study the Impact of ERP especially SAP implementation on the operations of the Breweries and Distilleries company.

The Indian Distilleries sector is one among the fastest growing sectors in India, especially over the last decade. India is the fourth largest producer of ethanol in the world and

the second largest in Asia.

The use of Alcohol as a drink is an age-old story in India. The techniques of fermentation and distillation was available right from the Vedic times. The 1st distillery in India was setup in 1805 at Cawnpore (now known as ‘Kanpur’) by Carew & Co. Ltd., for manufacture of Rum for the army.

Indian Breweries & Distilleries current market scenario is shown in the figure below.

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Figure 1: Indian Breweries & Distilleries Current Scenario

In 1931, India had 29 sugar factories which produced about 1.2 lakh tonnes of sugar and about 50,000 tonnes of molasses. The number of sugar factories increased dramatically to 135 by 1935-36 taking sugar production to 9.34 lakh tonnes and molasses production to 3.36 lakh tonnes. The country was not prepared for such a sudden increase in the production of molasses. This was one of the factors which induced the Government to encourage alcohol production using molasses. Thus, molasses which was considered a waste during the early years of the Indian sugar industry became a valuable by-product used in the manufacture of alcohol. In the absence of distillery industry, it is difficult to comprehend the extent of environmental damage that would have been caused by molasses. Without the distillery industry the Indian sugar industry could not have grown to its present size.

It was also recommended that alcohol produced by the distilleries should be admixed with petrol, to supplement motor fuel. The production of alcohol did not only help in solving the problems of disposal of molasses but it also filled up the gap in the demand and supply of motor spirit.

Till 1990's little more than 50% alcohol produced in the country was being utilized for production of alcohol based chemicals but after the decontrol of molasses in the year 1993 the utilization of alcohol for production of chemicals, dye-stuff ,synthetic rubber, polymers and plastics etc. has received a setback. However, with the advent of ethanol blending with petrol/ motor fuel, the requirement of ethanol/ industrial alcohol has increased manifold in the country to the extent that in case 5-10 % blending, if made mandatory all over the country, the sugar factory molasses available in the country shall not prove to be adequate for meeting the total requirement of ethanol including its use for potable liquors and other industrial uses. The alcohol industry has a total installed capacity of 4200 million litres of alcohol in a year. However, the licenced capacity is concentrated in three states of U.P., Maharashtra and Tamilnadu . With the announcement of the Government of India to make blending of motor fuel with ethanol upto 5 % mandatory and to raise it to 10% by the year 2017-18, a substantial increase in the requirement as well as production capacity of ethanol is expected and a large number of ethanol distilleries are on the anvil of installation.

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Figure 2: Brewing Process

The process of making beer is known as Brewing. The purpose of brewing is to convert the starch source into sugary liquid called Wort and to convert the wort into the alcoholic beverage known as beer in a fermentation process affected by yeast. The basic ingredients of beer are water, a starch source, such as malted barley, able to be fermented (converted into alcohol), a brewer's yeast to produce the fermentation; and a flavouring such as hops.

Initially, the distilleries and breweries sector was unorganized making the operations of the industry like forecasting, inventory management, data management, supply chain management etc. extremely difficult. With the implementation of ERP systems in the organization the complexities have reduced by a greater extent. For example SAP has made the process of data management, inventory management, forecasting and scheduling system a lot simpler. SAP helps the organizations to get the better understanding of business, anticipate the needs and inspire the customers, employees, vendors, and shareholders by delivering better results.

The 3 important areas where SAP solutions can reduce complexity and improve results are

Forecasting & Supply chain Planning:

Supply chain planning is largely dependent on forecasting. Matching the demand & supply is the important goal for all organizations and is the heart of operational planning. Plant, Process and labor capacity are all set based on the forecast of future demand. Forecast thus plays an important role in an organizations growth and profit making ability. With the help of ERP the organization is able to get the historical and seasonal data which can be used along with a Business Intelligence tool to approximately identify the future demand.

Inventory Management:

With the implementation of SAP the inventory management part of the organization has become much simpler. With the clear understanding of the demand, proper planning and scheduling can be done properly. Thus resulting in better management of the availability of raw materials and also reducing the amount of money spent on maintaining the inventory and optimizes the inventory cost.

Data Management:

If the data is not systematic, the effectiveness and efficiency of carrying out the production is hampered. First part in data management is data creation. In Data Creation the nomenclature of this product is carried out by Brand name, product identifier (end use), unit of measurement, case lot, vendor, manufacturing details etc. The second part is data maintenance. In this data ambiguity is identified and repetitions are avoided. Data management is important in the distilleries and breweries sector because many decision-making are based on data.

Scope of project:

Geographical Scope:

The locations to be covered for SAP implementation are the Breweries & Distilleries organizations in Indian Market.

Functional Scope:

The scope defined for implementation of SAP in the Breweries & Distilleries sector organizations in India.

4. Library Research

4.1 Enterprise Resource Planning:

Enterprise resource planning is a business management system which integrates various aspects of business, it includes planning, finance, manufacturing, sales, distribution, and marketing. ERP tries to integrate all departments and functions in a company onto a single system which can serve well for all the different departments requirement. To achieve the integration a typical ERP system will use multiple components of computer software and hardware.

ERP system has many advantages - The direct advantages include better analysis and planning capabilities, improved efficiency, flexibility, information and business integration for better decision making, response time to customer queries is faster etc. The indirect advantages include improved customer goodwill, customer satisfaction, better corporate image, and so on.

Commercial ERP Packages

SAP

Oracle

BAAN

J.D. Edwards

People soft

Fedena

ERP 5

OpenERP

4.1.1 Problems with Enterprise Applications in the Breweries & Distilleries sector:

Essential prerequisite for synchronization of various business activities involved in Distilleries business is the proper integration of various business functions. Most of the large distilleries in India have already invested in packaged software suites in order to integrate their core business activities. There are still many distilleries who still use legacy systems and its software applications to manage their core business functions which results in lower levels of efficiency and effectiveness. Many CIO’s believe that it is a troublesome process to rip and replace the existing information system which is used for handling the operations in the organization

Many of the existing retail applications that are being used by the distilleries lack an encompassing approach and require certain degree of customization before they can be completely integrated with the business process. Major problem areas in the existing enterprise applications in distilleries include:

 

Outdated architecture – Many of the legacy enterprise applications used in distilleries have outdated architecture that are inflexible and rigid. This inflexibility and rigidity pose a great challenge to the efficiency of business. This lack of flexibility prevents the legacy software to be used with the packaged products that are available in the market which might help the operations of distilleries business. Business environment of today demands real time adaptability from the software systems.

Limited scope – Most of the legacy systems lacked an enterprise wide approach as they were designed specially to take care of particular problems tasks. This made these systems totally unsuitable for the use in contemporary business environment which is highly competitive in nature. An enterprise approach is required for the distilleries business processes and legacy systems fail miserably in that aspect.

High maintenance costs – Maintenance cost of the Legacy information systems are very high. The cost component is high for these systems as they are no longer used in the industry and also finding a specialized personnel for maintenance purposes is quiet difficult and costly. As the age of legacy system grows so does the maintenance cost, with passage of time the cost keeps increasing exponentially. The older an information system the more are the costs associated with its maintenance.

Scalability and Integration problems – Legacy systems prohibits addition and integration with new applications. Thus preventing such a system from scaling up or integrating with an associates’ or business partners’ similar system. As the size and scope of the distilleries business increases the scalability and integration problems tend to multiply.

Increased risk to the business – When an organization tries to combine its both old and new information system it becomes susceptible and might result in failure or crash. Primary cause of such a risk is heterogeneity. A homogeneous information system that can seamlessly integrate with other such systems in real time and also providing much-needed stability to the entire system.

4.1.2 Advantages of Using a ERP Suite

Configuration and scalability – A high degree of customization and scalability are 2 important aspects of a good retail ERP system. This allows the system to attune itself to the size of the organization and its level and scope of operations. Such configuration and scalability proves to be a huge boon in managing the operations across an enterprise.

Phased implementation support – Modern ERP systems provide huge support for phased implementation. This feature thus allows the software package to be implemented in a incremental step-by-step manner rather than in a one go approach. Thus making the transition to an ERP package a lot easier. It also allows users to acclimatize themselves to an ERP package that might look complicated at the start.

Support for advanced functionality – Modern ERP systems provides excellent support for advanced functionalities which are helpful in making the decision making process such as formulating pricing strategies, inventory optimization and forecasting a lot easier. These advanced functionalities help the users to formulate business strategies that introduce effectiveness & efficiency to the critical business processes. The top management uses this feature to set benchmarks and achieve the expected results.

Workflow automation and enterprise process management – Modern day ERP packages provide with workflow automation and proper enterprise process management which makes the workflow smooth and seamless across the entire enterprise. This allows the top management to monitor and keep track of the workflow while also taking care of the enterprise process management part which leads to the identification and removal of all inconsistencies in the business process.

Technology and application integration – A good ERP system will allow technology and application integration, to allow a platform independent and seamless transfer of processes across different modules, which are running on different technologies in an enterprise wide environment which might include interaction with legacy systems and external entities such as the customers and the suppliers. This integration provides the organization with the critical enterprise-wide view.

SWOT Analysis of ERP in Distilleries Business: 

                  STRENGTHS

 

Provides with an enterprise wide view of the entire workflow

 

Allows proper integration with systems of associates and business partners

 

Helps in all routine decision making

 

Allows proper streamlining of business processes

 

 

                 WEAKNESS

 

Very Expensive to procure

 

Requires significant employee training

 

Compatibility & Scalability issues with other/legacy systems

 

Security concerns

 

 

                 OPPORTUNITIES

 

Booming Distilleries sector in the emerging Indian markets

  

 

High efficiencies becoming critical in the distilleries sector due to high competition and paper-thin margins

 

              THREATS

 

Opposition to globalization and transnational movement of goods

 

Increasing complexity of such systems

 

Divided opinion over the Return-On-Investment (ROI) from such tools

 

Security concerns regarding sharing of data over a network

 

4.2 System Application and Product (SAP)

SAP was founded in 1972 in Walldorf, Germany. It stands for Systems, Applications and Products in Data Processing. Over the years, it has grown and evolved to become the world premier provider of client/server business solutions for which it is so well known today. The SAP R/3 enterprise application suite for open client/server systems has established new standards for providing business information management solutions.

SAP's products focus on Enterprise Resource Planning (ERP), which it helped to pioneer. The company's main product is SAP ERP. The name of its predecessor, SAP R/3 gives a clue to its functionality: the "R" stands for release the number 3 means it's the 3rd release, which also happens to relate to a 3 tier client-server architecture (database layer-application layer-presentation layer)3-tier architecture: database, application server and client (SAPgui). R/2, which ran on a Mainframe architecture, was the first SAP version.

The main advantage of using SAP as your company ERP system is that SAP have a very high level of integration among its individual applications which guarantee consistency of data throughout the system and the company itself. A standard SAP project system, it is divided into three environments, Development, Quality Assurance and Production.

The development system is where most of the implementation work takes place. The quality assurance system is where all the final testing is conducted before moving the transports to the production environment. The production system is where all the daily business activities occur. It is also the client that all the end users use to perform their daily job functions.

It allows businesses to make rapid changes in their business requirements with a common set of programs. User-exits are provided for business to add in additional source code. Tools such as screen variants are provided to let you set fields attributes whether to hide, display and make them mandatory fields.

A typical company has many separate systems to manage different processes; each of these systems has its own databases and seldom passes information to other systems in a timely manner. SAP takes a different approach. There is only one information system in an enterprise. All applications access common data. Real events in the business initiate transactions.

The sole purpose of an R/3 system is to provide a suite of tightly integrated, large-scale business applications.

The standard set of applications delivered with each R/3 system are the following:

Basis

ABAP/4 Programming

FI (Financial Accounting)

CO (Controlling)

EC (Enterprise Controlling)

TR (Treasury)

IM (Investment Management)

HR (Human Resource)

SD (Sales and Distribution)

Logistics Information System

MM (Materials Management)

PM (Plant Maintenance)

PP (Production Planning)

QM - Quality Management

BW (Business Warehousing)

IS (Industry Solutions) / SAP for Industries specific solutions

CS (Customer Service)

SMB

CA (Cross Application Components)

PS (Project Systems)

mySAP SEM

mySAP CRM (Customer Relationship Management)

mySAP Product Life Cycle Management

SCM (SAP Supply Chain Management)

Netweaver

mySAP SRM (Supplier Relationship Management)

These applications are called the functional areas, or application areas, or at times the functional modules of R/3. All of these terms are synonymous with each other.

Other major product offerings include Advanced Planner and Optimizer (APO), Business Information Warehouse (BW), Customer Relationship Management (CRM), Supply Chain Management (SCM), Supplier Relationship Management (SRM), Human Resource Management Systems (HRMS), Product Lifecycle Management (PLM), Exchange Infrastructure (XI), Enterprise Portal (EP) and SAP Knowledge Warehouse (KW).

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Figure 3: SAP Modules

SAP Basis:

Security (BC - SEC)

Application Link Enabling (ALE)

Remote Function Calls (RFC)

Object Linking and Embedding (OLE)

Common Program Interface Communications (CPI-C)

Electronic Data Interchange (EDI)

Customizing (BC-CUS)

ABAP Programming and Runtime Environment (BC - ABA)

Client Server Technology (BC - CST)

Network Integration (BC - NET)

Basis Services/ Communication Interfaces (BC - SRV)

Computing Center Management System (BC - CCM)

Upgrade General (BC - UPG)

Change and Transport System (BC - CTS)

Operating System Platform(BC - OP)

Database Interface, database platforms (BC - DB)

Front End Services (BC - FES)

ABAP Workbench (BC - DWB)

Documentation and Translation Tools (BC - DOC)

Controls and Control Framework (BC - CI)

Business Management (BC - BMT)

Middleware (BC - MID)

Computer Aided Test Tool (BC - CAT)

Ready to Run R/3 (BC - BRR)

Authorisations System Monitoring with CCMS Workload Alert Monitor

ABAP/4 Programming:

ABAP Workbench

Menu Painter

Screen Painter

Data Dictionary

SAP Script

Business Workflow (BC - WF)

ALE

EDI

Business Connector

Business Server Pages

Internet Application Server

Mercator Report Painter

ALV reporting

Report writer

Dialog Programming

Repository Information System

ABAP 00

IDOCS

LSMW

Smartforms

EBP

ASAP methodology

ABAP Query

SAP FI (Financial Accounting):

General Ledger Accounting (FI - GL)

Special Ledger (FI - SL)

Extended Ledger

Accounts Payable (FI- AP)

Accounts Receivable (FI - AR)

Asset Accounting (FI - AA)

Bank Accounting

Funds Management (FI - FM)

Travel Management (FI-TM)

Consolidation

SAP CO (Controlling):

Cost Centre Accounting (CO - CCA)

Overhead Cost Controlling (CO - OM)

Activity Based Coding (CO - ABC)

Product Cost Controlling (CO - PC)

Profitability Analysis (CO - PA)

Material Ledger (CO - ML)

SAP EC (Enterprise Controlling):

Consolidation (EC - CS)

Executive Information System (EC-EIS)

Profit Center Accounting (EC - PCA)

Business Planning and Budgeting

SAP TR (Treasury):

Cash Management (TR - CM)

Loans Management (TR - LM)

Market Risk Management (TR - MRM)

Treasury Management (TR - TM)

Funds Management (TR - FM)

Information System

SAP IM (Investment Management):

Investment Programmes

Investment Measures (orders/products)

Corporation Wide Budgeting

Appropriation Requests

Automatic Settlement of Fixed Assets

Depreciation Forecast

Information System

SAP HR (Human Resource):

Recruitment

Personnel Administration

Benefits Administration

Compensation Management

Personnel Development

Organizational Management

Travel Management

Training and Events Management

Personnel Planning

Time Management

Incentive

Wages

Workflow

Payroll

Internet Scenarios

Information System

SAP SD (Sales and Distribution):

Master Data

Sales

Sales Support

Sales Information System

Billing

Special Business Transactions

Shipping

Transportation

Credit Control

QM in SD

Internet

Foreign Trade

Electronic Data Interchange

SAP Logistics Information System:

Purchasing Information System

Sales Information System

Inventory Controlling

Retail Information System

Production Planning and Control Information System

Plant Maintenance Information System

Project Information System

SAP MM (Materials Management):

Purchasing

Invoice Verification

Logistics (General)

Logistics Information System

Inventory Management

Inventory / Valuations

Materials Planning

Workflow

External Services Management

QM in MM

Warehouse Management

SAP PM (Plant Maintenance):

Preventative Maintenance

Maintenance Order Management

Maintenance Projects

Service Management

Maintenance Planning

Equipment and Technical Objects

Structuring Technical Systems

PM Processing

Work Clearance Management

Internet Scenarios

Customising

Information System

SAP PP (Production Planning):

Make to Order (CR)

Make to Order (PIR)

Repetitive Manufacturing

PP for Process Industries (PP - PI)

PP - Processes

Sales and Operations Planning

Capacity requirements

Master Planning

KANBAN

Production Orders

Product Cost Planning

Plant Data Collection

Assembly Orders

Information System

SAP QM - Quality Management:

Planning

Inspections

Notifications

Control

Certificates

Test Equipment Management

QM-IS

SAP BW (Business Warehousing):

Data Warehousing

BI Suite - Business Explorer

BI Platform

ODS Structures

Development Technologies

Info Cube

Design Build

SAP CS (Customer Service):

Service Processing

Controlling

Service Contracts

Workflow in Customer Service

SAP SMB:

SAP SMB

SAP CA (Cross Application Components):

SAP Business Workflow

Application Link Enabling (ALE)

SAP PS (Project Systems):

Basic Data

Operational Structures

Project Planning

Approval

Information System

Project Execution and Integration

Work Breakdown Structure

mySAP SRM (Supplier Relationship Management):

Self Service Procurement

Service Procurement

Plan Driven Procurement

Spend Analysis

Strategic Sourcing

Catalogue Content Management

mySAP SEM:

Business Consolidation (SEM-BCS)

Business Information Collection (SEM-BIC)

Business Planning and Simulation (BW-BPS)

Corporate Performance Monitor (SEM-CPM)

Stakeholder Relationship Management (SEM-SRM)

mySAP CRM (Customer Relationship Management):

CRM Enterprise

Field Applications

Interaction Center

E-Commerce

Channel Management

Industry Specific CRM

mySAP Product Life Cycle Management:

Document Management

Engineering Change Management

Enterprise Content Management

Classification

Basic Data for Process Manufacturing

SAP SCM (SAP Supply Chain Management):

SCM Process and Business Scenarios

SAP Forecasting and Replenishment

SAP Advance Planning and Optimization (SAP - APO)

SAP Inventory Collaboration Hub (SAP - OCH)

SAP Event Management (SAP - EM)

SCM Basis

SAP Netweaver:

SAP Masterdata Management

Information Integration

Portal Content

Process Integration

Knowledge Management

Life Cycle Management

SAP Business Intelligence

SAP Visual Composer

People Integration

Application Platform

SAP Web Application Server

SAP Business Information Warehouse

SAP Solution Manager

SAP Enterprise Portal

SAP Mobile Engine

Security

SAP IS (Industry Solutions) / SAP for Industries

SAP has the following industries specific solutions:

Aerospace & Defence

Consumer Products

Defence & Security

Retail

Insurance

Mill Products

Higher Education & Research

Industrial Machinery & Components

Logistics Service Providers

Automotive

Chemicals

Pharmaceuticals

Banking

Telecoms

Life Sciences

Mining

Public Sector

Service Provider

Media

Healthcare

Oil & Gas

Utilities

Postal Services

4.3 SAP Implemented Methodologies:

How SAP project is implemented?

4.3.1 Basic Essentials:

Steps required to implement SAP are as follows:

Determine whether the company is ready for SAP implementation: an organization needs to be ready for a change and its management needs to be fully supportive behind the project.

Develop an implementation plan: Without a proper plan, there would be either a slow and grinding project or a complete disaster.

Develop the budget: This is a very critical success factor which drives many elements including scope and schedule: depending on the methodology and type of cost structure, the overall implementation cost and budget can vary considerably.

Select the implementation partners: This is a phase were the organization decides on whether the implementation can be done internally or externally. If external we will have to determine the quality and the level of skills and experience that the external organization possesses.

4.3.2 Big versus Small approach

There are two approaches to implementation which are generally followed for an SAP project. They are

Big bang approach:

In this approach, a full-blown Sap system will be implemented. All the modules which are required by the company are configured and implemented at the same time. All legacy systems that are to be replaced by SAP are targeted for retirement. All subsidiaries of the company are included as a single phase project.

Advantages

Since all modules go live at the same time there are only a few or even no interface between legacy systems and the new applications.

Throughput time is short.

Motivation of project members is high

Redundant customizing is avoided hence it is highly efficient.

All components are optimally integrated with proper considerations of the integrated business processes.

Disadvantages:

Increased need for coordination and integration has made the Implementation process a complex one.

Over a short period of time resource is intensive.

All employees of the organization are subject to higher stress levels at the same time.

Consulting support of a high degree is required.

Changes in the organizations are to be limited in order to overcome the resistance to change among employees.

Phased Approach:

This is an approach in which implementation is modest and on a step-by-step approach. The entire project is implemented in a number of phases. The core objective is to avoid risk and work on a smaller, and a more manageable, project. Number of options are existing in the phase approach method.

Advantages:

Complexity in coordinating, organizing and controlling the project and resources is reduced.

Human Resource required for the project implementation is minimum.

With the increase in the knowledge and skill of the project members, the quality of the project improves.

Over time a team of internal consultants can be established, thus reducing the cost involved in the project.

A smoother changeover happens throughout the company: so the people have sufficient time to adapt to changes.

Costs are spread across a longer period of time.

During the implementation modest organizational changes can be considered.

Disadvantages:

Project throughput time is longer.

In order to maintain existing systems interfaces must be developed.

Integration advantages of the project can be used step by step only.

Since integrating components have not yet been implemented customizing may not be optimally set.

Delay in Return on investment.

Implementation Methodologies

4.3.3 Conventional Methodology:

There are two different methodologies used to implement an SAP project: ASAP methodologies and conventional methodologies. The conventional methodology is basically known as the SAP procedure model, it was initially widely used to implement SAP. In the last few years, it has been overshadowed by the rapid ASAP methodology. However, it still remains as the preferred methodology for implementing SAP at very large companies, especially for those organizations with revenue with millions dollars.

ASAP procedure model is basically divided into 4 major phases:

Organization and conceptual design

Detailed design and system setup

Go-live preparations

Productive operations

This methodology requires a very detailed analysis of the existing system, the current functionality and the business processes to be conducted. A significant amount of time will be spent on matching the "as-is" and creating a "to-be" system. Decision making process is very slow as it is always based on the consensus, which takes large amount of time to achieve.

The major drawback of procedure model is that even though it does not dictate there are way too many implementation that are tried to mirror the existing system within SAP. Another drawback of this methodology is that it uses a company’s existing process, instead of SAP processes, as the starting point of the mapping processes.

Figure 4: Comparison of ASAP methodology and conventional methodology

4.3.4 ASAP Methodology:

ASAP stands for Accelerated SAP. Its main purpose is to help design an SAP implementation in the most effective and efficient manner that is possible. Its main goal is to effectively optimize time, people, quality and other resources, by using a proven methodology of implementation. ASAP usually focuses on tools and training, wrapped up in a five-phase process oriented road map for guiding the implementation.

The road map is basically composed of five well-known consecutive phases:

Phase 1: Project Preparation

Phase 2: Business Blueprint

Phase 3: Realization

Phase 4: Final Preparation

Phase 5: Go-Live and support

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Figure 5: ASAP road map

Phase 1 : Project Preparation

Phase 1 starts with the retrieval of information and resources. It is an important time to collect and assemble all the necessary components for the implementation. Some major milestones that need to be accomplished for phase 1 include

Obtaining senior-level management/stakeholder support

Clearly identifying the project objectives

Design an efficient decision-making process

Creating an environment suitable for change and re-engineering

Building a qualified and capable project team.

Senior level management support:

One of the most important milestones with phase 1 of ASAP is attaining the full agreement and cooperation of the important decision-makers - key stake holders of the company and others. Their backing up and support is very crucial for a successful implementation.

Clear project objectives:

Be precise in defining what the objectives and expectations are for this project. Vague or unclear notions of what you want to obtain with SAP will make the implementation process very difficult. Also make sure that the expectations are reasonable considering the company's resources. It is also essential to have clearly defined ideas, goals and project plans devised before moving forward.

An efficient decision making process:

One major obstacle that pretty often stalls the implementation process is a poorly constructed decision-making process. Before starting on this venture, individuals need to be clearly identified. Decide on who will be responsible for the different decisions that happen along the way. From day one, the implementation decision makers and project leaders from each area must be aware of the onus placed on them to take good decisions quickly.

Environment suitable for change and re-engineering:

The team must be ready to accept the fact that along with new SAP software, things will be changing, the business will change, and information technology that enables the business will change as well. By implementing SAP, the organization will essentially redesign all its current practices to model a much more efficient or predefined best business practices as espoused by the SAP. Resistance to this change will impede the progress of SAP implementation.

Phase 2- Business Blueprint:

SAP has defined a business blueprint phase that will help to extract the pertinent information about the company that is necessary for implementation. These blueprints are in the form of a questionnaire that is designed to probe for information that will uncover how the company does business. As such, they also serve to document the implementation.

The business blueprint document will essentially outline the future business processes and business requirements of the organization. The kinds of questions that are asked are on the dot to a particular business function, as seen in the following sample questions:

What information do you capture on a purchase order?

What information is required to complete a purchase order?

Accelerated SAP question and answer database:

The question and answer database (QADB) serves as a simple although aging tool designed to facilitate the creation and maintenance of the organizations’ business blueprint. The database also stores the questions and the answers and serves as the heart of the blue print. Customers are usually provided with a customer input template for each application that collects the data. The question and answer format is often standard across different applications to facilitate easier use of data by the project team.

Issues database:

Another tool that is used in the blueprinting phase is the issues database. This database stores all open concerns and all the pending issues that are related to the implementation. Central storage of all this information helps us in gathering the data on issue and then managing the issue to reach the resolution, so that the important matters do not fall through the cracks. We can also keep track of these issues in database, assign them to team members, and update the database accordingly.

Phase- 3 - Realization:

With the completion of the business blue print in phase 2, next step is with the functional aspects of the organization. The functional experts are now ready to begin configuring SAP. The Realization phase consists of to two parts.

The SAP consulting team helps you to configure your baseline system, called the baseline configuration.

The implementation project team then fine-tunes that system to meet with all the business and process requirements of the organization as a part of the fine tuning configuration.

The initial configuration which is completed during the base line configuration is based on the information that has been provided in the blueprint document. The remaining approximately 20% of the configuration that wasn’t tackled during the baseline configuration is completed during the fine tuning configuration. Fine tuning usually takes care of the exceptions that were not covered in the baseline configuration. This final bit of tweaking always represents the work necessary to fit your special needs.

Configuration Testing:

With the help of the SAP consulting team, we need to segregate the business processes into cycles of related business flows. These cycles serve as independent units that will enable you to test the specific parts of the business processes. This can also work through configuring the SAP implementation guide (IMG). This is a tool which is used to assist the organization in configuring the SAP system in a step by step manner.

Knowledge Transfer:

As the configuration phase comes to an end, it becomes absolutely necessary for the Project team to be self-sufficient with their knowledge of the configuration of the SAP system. Knowledge transfer to the configuration team that is tasked with system maintenance (that is, maintenance of the business processes after Go-live) needs to be completed at this point of time. In addition, the end users who are tasked with the actually using the system for day-to-day business purposes must also be trained.

Phase 4 - Final Preparation:

As phase 3 merges into phase 4, the organization will have to find ourselves not only in the midst of SAP training, but also in the midst of rigorous functional and stress testing. Phase 4 also concentrates on the fine tuning of the configuration before Go-live and more importantly, prior to the migration of data from your old system or systems to SAP.

Workload testing (including peak volume, daily load, and other forms of stress testing), and integration or functional testing are also conducted to ensure the accuracy of the data and the stability of the SAP system. Since we should have begun the testing back in phase 2, we do not have to wait too far to go until Go-live. Now is an important time to perform preventative maintenance checks in order to ensure optimal performance at the SAP system. At the conclusion of phase 4, take sufficient time to plan and document the Go-live strategy. Preparation for Go-live means that you are preparing for your end-users questions as they start actively working on the new SAP system.

Figure 6: Key deliverables

Phase 5 - Go-live and Support:

The Go-live milestone itself is easy to achieve; a smooth and uneventful Go-live is another matter altogether. Preparation is the key factor, including the necessary attention to all the what-if scenarios related not only to the individual business processes that are deployed but also to the functioning of the technology underpinning these business processes of the organization and also preparation for on going support, including maintenance contracts and documented processes and procedures that are essential.

5. Research Methodology:

The research is mainly based on a literature review. The research data includes books, articles, studies related to SAP implementation and interviews with functional and technical heads in India’s top most Companies in distilleries business. The preliminary explanations were reflected during the analysis of industry related examples.

6. Data Collection:

Data is collected from various organizations in the distilleries business which has implemented SAP in their systems, I have collected the secondary data from companies website.

6.1 Case Study 1: Mohan Breweries & Distilleries Ltd.

MOHAN BREWERIES AND DISTILLERIES LIMITED (MBDL) is one of the leaders in the South in Indian Made Foreign Liquor (IMFL) and Beer products with a turnover of Rs.1059 crores. It was established in the year 1982.

Liquor

MBDL is in technical collaboration with M/s.Mohan Meakin Limited (MML),Ghaziabad, who are pioneers in the liquor with an experience of 125 years. The IMFL Unit was established at Chennai, Tamil Nadu in the year 1982. In 1989, South Travancore Distilleries and Allied Products (STDAP) an IMFL Unit at Neyyattinkara, Trivandrum, Kerala was acquired. The IMFL Plant of erstwhile VORION CHEMICALS AND DISTILLERIES LIMITED became IMFL, A.P.Division consequent to the merger of VCDL with MBDL in 1994. This paved the way for three units that meet the requirements of Tamil Nadu, Kerala and Andhra Pradesh.

Brewery

In 1983, a Brewery Unit was commissioned adjacent to the IMFL Unit at Chennai, Tamil Nadu, meeting the requirements of Tamil Nadu market. It was the First Beer Licence issued by the Tamil Nadu Government. MBDL are the market leaders in Tamilnadu beer market and produce and market the famous brands like Golden Eagle Deluxe Premium Beer, Black Knight Super Strong Beer, Vorion 6000 Super Strong Beer and Madras Pilsner Premium Beer.

MBDL are pioneers in absorbing latest technology in manufacturing and upgraded their brewery to world class by installing Unitanks and introducing automation in process control, Filling and Packing of beer.

Glass

MBDL established a glass bottle manufacturing plant in Technical Collaboration with Bangkok Glass Industry Company Limited, Thailand in 1990 at Puducherry with a capacity of 120 tonnes per day for manufacture of various glass bottles for captive consumption as well as for sale to Pharma, Food and Beverages Industry Segments. Also export glass containers for pharmaceutical, liquor, beer industry of Asian and African Countries, for over a decade.

To meet with the growing demand for Glass Bottles, the capacity of the plant has been doubled from 140 tonnes per day to 240 tonnes per day. The plant went into commercial operation in its full capacity in April ’09.

Distillery

The Distillery Plant of erstwhile VORION CHEMICALS AND DISTILLERIES LIMITED, which was incorporated in 1966 and obtained Distillery License in the year 1972 became a captive distillery consequent to the merger of VCDL with MBDL in 1994.

The original capacity is 32 KL per day. The entire production is being captively consumed, but it only met 50% of the total requirement of ENA for the IMFL Unit at Valasaravakkam, Chennai. Therefore, the Company has doubled the capacity of the Distillery from 32 KLPD to 62 KLPD.

Power – Wind mill

MBDL’s diversification into power sector as early as in 1993 was a conscious decision to position themselves in sunrise industry as immense potential for growth is identified in the niche segment of non-conventional and renewable energy sources. MBDL created an installed capacity of 25 MW of power through wind energy.

MBDL added another 10.20 MW of Wind Farm and it was commissioned in September ’08.

Management and Organization

The Promoters, Shri M.Nandagopal and family own the entire equity of MBDL. MBDL is managed by a Board of Directors with Shri.M.Nandagopal as Executive Chairman and Shri Arvind Nandagopal as Managing Director.

The integrated nature of the facilities for captive manufacture of major inputs like spirit, glass bottles, power, sugar and bagasse have enhanced their competitiveness and helped in cutting cost of manufacture.

Aim

Mohan Breweries and Distilleries Ltd are the front runners in Distilleries sector in Tamil Nadu. They were the first company in India in the distilleries sector to have implemented SAP. The top level management wanted to promote transparency in the organization and also wanted to avoid the amount of time spent in waiting for a team to provide the required information to the other since the data wasn't available to every department. The management also wanted to reduce the amount of time spent in maintaining the data. As a initiative towards green environment the management wanted to reduce the usage of paper within the organization. Also with the increase in the number of competitors over the last decade, Mohan Breweries was forced to optimize the cost of production. The other major reason was the need for integration of various subsidiaries of the organization like the Glass Unit, Bottling Unit and their power producing unit.

Implementation:

Mohan Breweries and Distilleries Ltd were the first company in India in the distilleries sector to have implemented SAP. Implementation was done in 2000 by an internal team along with the help of Siemens which was the only partner of SAP by then. This internal team consisted of a technical consultant and several functional consultants. All these consultants were selected based on the amount of experience in the concerned function and also based on the understanding of the entire sector.

A Big Bang approach was used to implement SAP, i.e., SAP was implemented at the same time in all its 6 units. When it comes to customization of the solution to the need of the organization, there was a different approach followed by the organization in most of the cases. Mohan Breweries and Distilleries Ltd was willing to make the needed changes and align to the standards of the SAP solution, the reason behind this was that the organization felt that this move would make the future up gradations much easier. So there was a great deal of change management involved during the SAP implementation. The entire project was implemented in 9 months excluding the 6 months that was spent on the pre-implementation phase and time taken by the IT department to convince the top management to go for the ERP implementation.

Benefits & Challenges:

There were a lot of challenges during the implementation and data migration phase they are as follows,

Being the 1st company in Distilleries sector to implement ERP, the organization had no case studies with the Indian scenario to follow during the implementation phase.

Resistance from most of the employee in the organization as they were new to both computers and also to the technology.

End user training had to be given for a greater period of time (45 days) has the users had little knowledge about computer and also the technology.

Major benefits that Mohan Breweries and Distilleries Limited were able to see are,

Transparency.

Better Inventory Management.

Duplication of work was avoided.

Roles and Responsibilities were defined.

Easy to generate accurate MIS reports.

Higher Security.

Reduction in Manual work.

5000 users are currently using SAP.

6.2 Case Study 2: United Spirits Ltd.

United Spirits Limited (USL) is the largest spirits company in the world by volume, selling 122.75 million cases for the fiscal ending March 31st, 2012. Turnover the organization is approximately Rs 2000 crores per annum. Headquartered in Bangalore found by United Breweries Group.

Besides Whyte & Mackay and Bouvet Ladubay being 100% subsidiaries of USL, the company has 22 millionaire brands (selling more than a million cases a year) in its portfolio and enjoys a strong 59% market share for its first line brands in India. United Spirits' brands have won the most prestigious awards for flavours, ranging from Mondial to International Wine and Spirit Competition (IWSC) to International Taste & Quality Institute (ITQI); more than 165 awards & certificates.

The Company is known to be an innovator in the industry and has several firsts to its credit like the first pre-mixed gin, the first Tetrapack in the spirits industry in India, first single malt manufactured in Asia and the first diet versions of whisky and vodka in India.

The company is engaged in the business of manufacture, purchase and sale of beverage alcohol (spirits and wines), including through tie-up units/ brand franchises. They operate in two geographic segments: India and outside India. The India segment is engaged in the business of manufacture, purchase and sale of beverage alcohol (spirits and wines), including through tie-up units/ brand franchisees within India. The Outside India segment is engaged in the business of manufacture, purchase and sale of beverage alcohol (spirits and wines), including through tie-up units/brand franchisees outside India. The company's products include whisky, brandy and rum.

USL has a global footprint with exports to over 37 countries. It has a sizeable presence in India with distilleries and sales offices all across the country, and a committed team of over 7500 people dedicated to the fulfilment of the company's mission. It has established manufacturing and bottling plants in every state of India. In addition, to deliver its products to customers located anywhere in India, USL has established a robust distribution network covering the whole country.

Aim:

United Spirits Ltd is the front runner of the Distilleries sector. The major reason for the implementation was the need for the integration of various subsidiaries of the organization like the Glass Unit, Bottling Unit etc. With the operations of the organization in 37 countries there was a stronger need for proper integration between different units which pushed the organization towards implementation of an ERP. The management wanted to reduce the amount of time spent in maintaining the data. The top level management also wanted to promote transparency in the organization. There was constant need of data from different units at different times which meant for proper integration as a result the information would be available at the right time. The management wanted to reduce the amount of time spent in maintaining the data with the implementation of proper standards.

Implementation:

Implementation was done in 2009 by an internal team This internal team consisted of 3 technical consultant and several functional consultants. All these consultants were selected based on the amount of experience within the concerned function and also based on exposure to SAP technology. The organization also hired many SAP consultants who are currently involved in maintaining the implementation and other related applications.

An ASAP approach was used to implement SAP, i.e., SAP was implemented in phases. 4 SAP modules were implemented which were under 2 functional consultants for each module whose job was to create the proper mapping of AS-IS process and provide it to the technical consultant. Following this Business blueprint mapping the focus shifts on to GAP analysis to find out the gaps and try and fix them. The entire project was implemented in a year, Project Preparation: 1 months, Business Blueprint: 2 months, Realization: 6 months (2 months for simulation + 4 months for validations) and Final Preparation: 3 months

Benefits & Challenges:

There were a lot of challenges during the implementation and data migration phase they are as follows,

Integration of data from various units from various geographical location made it difficult.

Resistance from most of the employee in the organization as they were new to both computers and also to the technology.

Training material development was needed to be made in different languages for usage in different countries in order to provide confidence to users.

Major benefits that United Spirits Limited were able to see are,

Good Control

Transparency.

Better Inventory Management.

Accuracy

Roles and Responsibilities were defined.

Easy to generate accurate MIS reports.

Higher Security.

Proper Authorization which leads to No manipulation hence no data corruption or thefts.

6.3 Case Study 3: Empee Distilleries Ltd.

The Company was originally incorporated on September 15, 1983 as a Private Limited Company and was converted into a Public Limited Company with effect from December 1, 1983. The company has entered into the Beverages and Distillery Industry in the year 1984 by starting manufacture of IMFL products by means of setting up first distillery unit at Mevaloorkuppam, Tamil Nadu with an installed capacity of 2000 cases/day with initial production running off on 2 semi auto lines. In the year 1985-86, the company has entered into a strategic tie up with Brihans Maharashtra Sugar Syndicate Limited, Pune, for bottling their premium brands namely Brihans Napoleon Brandy and Brihans Premium Whisky, besides Golden Bell Brandy, Whisky, Gin and Rum in the other segments.

In the year 1986-87 the production facility at Mevaloorkuppam was augmented by additional four semi automatic lines which resulted in production touching 4,000 cases per day in January 1987 and 6,000 cases in the following year. With a view to enhance the quality of the spirit that goes into production, the company has decided to set up own distillation columns and commenced work. These distillation columns were commissioned during March 1988 with a capacity of 9KLPD. In the year 1991-93, the company has acquired a brewery unit from the Government of Tamil Nadu at Kutumbakkam Village, near Chennai and began production and sales under the labels Marcopolo Strong and Lager Beer. In the year 1995-96 the production capacity of our IMFL Unit was further expanded to 10,080 cases per day / 2,52,000 cases per month. Concurrently the capacity of the secondary distillation was also increased to 20 KLPD by setting up a modern Re-Distillation Unit to meet the in house ENA requirements.

The company has entered into tie-up arrangements in Pondicherry, Kerala and New Delhi for manufacture and sale of its brand products. Considering the high energy needs of the brewery and distillery units, the Company has installed Wind Energy Generators (WEGs). Eight WEGs with a capacity of 2 MW each were commissioned during the year 1996-97. The company has entered into a Power Purchase Agreement (PPA) on March 29, 1997 with the Tamil Nadu Electricity Board (TNEB), under which the Board granted permission to install 8 Wind Mills of 250 KW capacity each, for power generation and to export Power to the grid with remaining power being adjusted with liquor divisions. In the year 1997-98, the company has received Licence from the Government of Kerala for setting up of IMFL Unit at Palakkad with an initial capacity of 50,000 cases per month. In the year 1999-2000, in order to achieve economies of scale and full capacity utilization, in respect of Brewery Division, the company has entered into a tie up with Shaw Wallace & Co. Limited for bottling.

In order to diversify and expand the business activities by means of both backward and horizontal integration and to achieve economies of scale in the existing business activities. The company has decided to expand existing distillery unit at Tamil Nadu by augmenting the capacity of Extra Neutral Alcohol Plant from 20KLPD to 70KLPD and augmenting the capacity of the distillery to handle 5.00 Lakh cases per month from the present 3.20 Lakh cases per month, set up a 60 KLPD Grain Based Distillery Unit at Nellore District, Naidupet Sub-District, Pellakuru Mandal, Pellakuru Village, Andhra Pradesh, set up Blending & Bottling IMFL Plant at Village Pellakuru Mitta, Panchayat, Pellakuru, Mandal-Pellakuru, District Nellore with a installed capacity of 0.70 Lakh cases per month, Andhra Pradesh and set up a 7.5 MW Bio-mass based power plant at Aranthangi Taluk, Pudukottai District, Tamil Nadu along with diversifying into the real estate sector by development of 2.00 Lakhs sq.ft. of residential space in Mevaloorkuppam, Sriperumbudur Taluk, Kancheepuram, District Tamil Nadu. The company has acquired from Appollo Alchobev Limited, one of our Promoter Group Companies engaged in the business of manufacture and sale of IMFL at White field, Bangalore and having an operating IMFL manufacturing Unit, Operating Assets together with the benefits and obligations of all current and valid licenses, permits and sanctions pertaining to the said assets and the manufacture of IMFL and sale thereof and the benefits of all pending contracts related thereto for the purchase of any materials and sales of IMFL for a consideration of Rs. 800.00 Lakhs vide Asset Purchase Agreement dated March 22, 2007. Accordingly the company has proposed to relocate Plant & Machinery as purchased from Appollo Alchobev Limited to Village Arabikothanur, Panchayat-Vokkaleri Hobli, District Kolar, and Karnataka along with expanding the existing capacity from 0.50 Lakh cases per month to 1.00 Lakh cases per month.

Aim:

With the increase in the amount of data being generated each day there was a huge requirement of automation of the system. In order to make the data available to all there was a strong requirement for integration. With the operations of the organization being across the country, there was a stronger need for proper integration between different units this pushed the organization towards the implementation of an ERP. The top level management also wanted to promote transparency in the organization. There was constant need of data from different units at different times which meant for proper integration as a result the information would be available at the right time. The management wanted to reduce the amount of time spent in maintaining the data with the implementation of proper standards.

Implementation:

Implementation was done in 2008 by an external team SEAL Infotech. This external team consisted of technical consultant and several functional consultants. The external partner was selected based on the amount of experience in SAP implementation and their success ratio. They were properly guided by an internal team in several aspects right from understanding the process, blue print generation and creating the to-be process. The organization as outsourced the job of maintaining the implementation and other related applications.

An ASAP approach was used to implement SAP, i.e., SAP was implemented in phases. 3 SAP modules were implemented for a cost of Rs. 40 lakhs. The external team consisted of a technical consultant and a functional consultants for each module along with consultants from the organization to guide the external team to what kind of system they actually want.The entire project was implemented in 8 months. Project Preparation: 1 months, Business Blueprint: 45 days, Realization: 3 months (1 months for simulation + 2 months for validations) and Final Preparation: 2 months

Benefits & Challenges:

There were a lot of challenges during the implementation and data migration phase they are as follows,

Integration of data from various units from various geographical location made it a difficult process.

Co-ordination between the internal and external team was an issue at start.

Legacy system(Fox pro) data migration was a big challenge

Resistance from most of the employee in the organization.

Production suffered a lot during the training required maintaining both process at once was a great challenge.

Major benefits that the organization was able to see are,

Good Control

Transparency.

Better Inventory Management.

Roles and Responsibilities were defined.

Easy to generate accurate MIS reports.

6.4 Case Study 4: Southern Agrifurane Industries Ltd.

Southern Agrifurane Industries, Ltd. manufactures liquor in India. The company was established in 1960. The company offers whisky, rum, brandy, and vodka. It markets its products in Assam, Meghalaya, Kerala, Orissa, Bihar, and Jharkhand. The company is based in Villupuram, India. It has facilities in Villupuram and Hyderabad in India. Southern Agrifurane Industries, Ltd. operates as a subsidiary of MGM Group of Companies. The organization belongs to M