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Sartaj Singh, Lovely Professional University Unit 13: Case Study – ERP SAP Implementation

unit 13: case study – erp sap implementation notes

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Case Study sap r/3 at tata steel
ata Iron and Steel Company Limited (TISCO) made a steely resolution to remodel
itself from a product-driven to a customer-driven enterprise of the Internet economy.
TIt deployed an ERP, SAP R/3 to help its resolution bear fruit, and now enjoys exciting
operational and cost benefits by Bhavish Sood.
“Post the introduction of the ERP solution, the results have been terrific. Tisco has spent
close to ` 40 crores on its implementation and has saved ` 33 crores within a few months,”
said Ramesh C. Nadrajog, Vice President, Finance. “The manpower cost has reduced from
over $200 per ton two years ago, to about $140 per ton in 2000.
The overdue outstanding has been brought down from ` 5,170 millions in 1999 to ` 4,033
million by June 2000. The inventory carrying cost has drastically deflated from ` 190 per
ton to ` 155 per ton. To add to this, there have been significant costs savings through
management of resources with the implementation of SAP.”
Sounds almost Utopian doesn’t it? But that’s exactly the result of TISCO’s ERP
implementation completed within eight months. TISCO is Asia’s first and India’s largest
integrated private sector steel company. It has a state-of-the-art 3.5 million tonne steel plant
and is capable of meeting the most rigorous demands of its customers worldwide.
The company adopted ERP technology to take a lead in the competitive steel industry
and through constant learning, innovation and refinement of its business operations, has
transited seamlessly from a production-driven company to a customer-driven one. The
existing technology was a simple replication of the manual system. Not only did it operate
as individual islands of information but the technology had outlived its lifetime and was
completely obsolete. The employees and management at TISCO faced a cumbersome task
exchanging and retrieving information from the system.

Further, the reliability of information obtained was questionable because of inconsistency
and duplication of data from different departments. Also there was no built-in integrity
check for various data sources. Besides, several times the information against certain items
was found missing.
an early response

Responding to changing customer needs started as early as 1991, with a study on cost
competitiveness and a formal business plan, followed by ISO 9002 certification and
benchmarking initiatives. Realizing the need to further support the re-engineered core
processes and quickly align the business processes to radical changes in the market place,
TISCO decided to go for a new robust solution.

Design
In 1998-99 a small cross-functional in-house team along with consultants from Arthur D.
Little (Strategy Consultants) and IBM Global Services (BPR Consultants) redesigned the two
core business processes: Order Generation & Fulfillment and the Marketing Development
processes. This was done to improve customer focus, facilitating better credit control, and
reduction of stocks.
Contd...

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