Indofil Deploys Cognos BI; Scouts For RFID

by Amit Tripathi    Jul 06, 2005

Indofil Chemicals Company is a perfect example of an enterprise that takes quick steps in order to leverage the benefits provided by technology. Having deployed an integrated ERP barely a year ago, the company has just completed the deployment of a customized supplier relationship management (SRM) system, a business intelligence (BI) application, and is now evaluating RFID technology to automate its supply chain.

The man behind these missions, Umesh Shah, manager - planning & despatch, Indofil Chemicals Company, informed, “We are evaluating the option of RFID technology at the moment, which will augment the supply chain efficiency. But this initiative will take shape only after we complete extending the Cognos BI application to the production division as well.”

Since April 1, 2005, the BI application has been operational for sales and manufacturing departments. But, Shah wants to draw much more out of the BI facility. Shah said, “We are now faced with competition both from foreign as well as domestic players. To maintain the lead in such a scenario, effective positioning of our product and that too according to demand is the key. Thus, we plan to extend the application to production division to enable product profitability analysis.” The company would be spending close to Rs 18 lakh on BI alone.

Shah waxes eloquent about the recent SRM deployment (for which the logic was scripted by Shah himself), that has enabled around 80 critical suppliers of the company gain access to the company’s ERP application and transact. And the benefits have been immediate. Said Shah, “Now, no more phone calls to know the payment status. Suppliers can book and send the bill online. Raw material and packaging information too is available online.” Thus in a sense the suppliers are a part of the just in time (JIT) mode of manufacturing.

For an enterprise whose annual purchases goes to the tune of Rs 172 crore (last year), and which is slated to touch Rs 230 crore this year, the processes involved in purchase, quality control and others gains obvious significance.

Shah, a chartered accountant at the core, devised what he terms as activity based costing (ABC), which helped in weaning out those activities that led to cost escalation or are redundant. He sites the example of a particular chemical, which was manufactured in 718 activities. Through ABC it was realized that the same product can be manufactured in 512 activities, resulting in enormous cost and time savings. Thus, he suggests that it is beneficial to adopt ABC method rather than process based costing.

To ensure that the organization as a whole becomes more accountable, Shah incorporated ‘escalation matrix’ in the core application that will automatically send alarm to respective officials in the hierarchy once there is a gap or violation in a certain process. Thus, if a certain activity that has been assigned a particular duration at the despatch desk is not done, an alarm will be automatically be raised at the desk of the next higher up official in the chain, who would then take up the matter.

Said Shah, “To derive best from our business strategy we rely on the support of IT and it is paying us dividends.” The company has put the onus of IT management on Omnitech, but every IT decision is meticulously discussed and charted. He stated, “Our investments in IT strategy always brings us visible and quantifiable benefits. With our chairman as the head, we have a select committee that first chalks out business objectives taking business challenges into consideration. Once that is sorted out we look for suitable technology to achieve those aims.”

For example, prior to deploying the ERP the company was faced with the challenge of uniformly monitoring the processes of each department. The task was humongous since the company engages itself in manufacturing seven different types of products. The challenge was to maintain optimum raw material and finished goods stock level. With the iBaan ERP deployment, the company integrated its disparate applications manning various departments.

The ERP interacts with an Oracle 9i database at Indofil Chemicals, and provides application modules to approximately 150 users. Last year the company had spent Rs 1.08 crore on IT, which is expected to scale to around Rs 1.32 crore this year.

Indofil’s 22 sales locations - the corporate office, the main plant at Thane and three other plants - have simultaneously been connected by VPN connectivity, provided by Sify, to get the application available at all centers. Indofil Chemicals, (a division of Modipon group), has its presence in the field of agrochemicals, construction, leather, textiles, paints, paper adhesives, and petroleum.

Tags: RFID