by June 30, 2011 0 comments

As SMEs in the manufacturing segment become more aggressive towards IT deployments, they become all the more poised to increase employee productivity, revenue growth and profits. ERP deployment, that topped the charts for this vertical in our Best IT Implementation 2011 drive, has matured to become more of a necessity than a choice for these companies. That spreadsheets with standalone accounting and desktop applications cannot manage data and aid in business growth beyond a point; has been well realized by companies such as Essae Digitronics, a Bangalore-based company that manufactures weighing and automotive products. Their success story follows now.

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What they were

Three years ago, Essae Digitronics comprised of four business units operating from three different locations with the corporate and finance headquarters housed in a fourth location. Owing to information reports being exchanged between four offices, there was a great deal of inefficiency in matters pertaining to accounts, payments to vendors, customer credit management and inventory control.

Three years ago, the company relied on Tally Enterprise to manage company accounts. The individual business units were managed using stand-alone software for invoices and reports were sent to corporate headquarters. The business was growing, and it became difficult to maintain visibility into customer receivables and business unit processes at any given point of time.

Inaccuracy in inventory control resulted from a manual system using MS Excel worksheets. Furthermore with over 500 suppliers, it was a challenge to keep track of accounts payables and receivables, invoice processing, invoice payments and documentation.

The then Rs. 43 crore company, with simpler operational processes, anticipated the ever increasing complexity of business and envisaged an ERP implementation.

The IT implementation

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The company finally went for SAP Business One ERP, implementing the standard modules of Sales, Inventory, HR, Purchase, Finance, Service and Production. Besides, the customized modules and add-ons include the ones for Incentives, Price Approval, GRN (Goods Receipt Note) Validation, RTGS, Sub-Contracting, Pay-roll and C Forms. And finally, the company takes a step further by integrating SAP Business One with cloud-based Expense on Demand and Salesforce management applications. The implementation integrated data sources from five business divisions following different business models into a single database.

Business impact

The implementation benefits users working in Production, Stores, Purchasing, Sales, Shipping, and Finance departments. The receivables of the company are under control. Essae has gained absolute transparency in payments/dues. It has implemented measures such as credit locks and approvals to maintain a check over defaulting customers and to ensure timely collection of C-Form and other essential documents. The accuracy of MIS reports and P/L statements ensure that key decision makers have real time view of business that was not possible 3 years back when they had a manual approach.

Employee productivity has increased as the company has scaled from Rs 43 Cr to being an 85 Cr enterprise with negligible increase in workforce. Post-implementation, the company’s turnover has increased by 26% and the receivables have reduced by 50%. What this has extrapolated to is that Essae’s bank borrowings have reduced by almost 60% during the last couple of years. Having experienced enormous control over its activities, Essae is now pursuing further productivity gains and wants to be managing a complete paperless operation of its business divisions by March 2014.

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