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Case Study Of Fortnight

Q: Tell us something about the business of your company?

Alfa Laval traces its presence in India since 1937. A sales company of Alfa Laval Group, Alfa Laval India has its local registered office at Pune. Factories in India located in Maharashtra manufacture and supply key components and systems in Separation, Heat Transfer and Flow technology.

Q: What kind of business applications / IT infrastructure are used at your company?

Alfa Laval (India) Ltd., operates through 3 factories in Maharashtra, 2 service centers in Thane and Vishakhapatnam and 21 sales locations with a well connected network (LAN) and MPLNS network that supports about 1200 users in India. The Alfa Laval group around the world has 17000 users. The Business applications are run on Movex, and workflow applications and mail is hosted on Lotus Notes platform. Being an Engineering company, engineering software is closely developed internally. However we make extensive use of CADDISSON, AutoCAD, Solid-Works etc. India is also one of the hubs for worldwide infrastructure support.

Q: Name the project if any?

BI for Accounts Receivables

Q: What was successfully implemented? Describe the project or initiative and the solution you deployed. e.g.: BI, CRM, ERP, SCM, SaaS, Green IT, WAN, Virtualization, Data Centre, Security, Web based solution, Unified Communication, Server Consolidation, Security, Mobility and field force automation, Cloud Computing, online portal, etc ?

This is a Business Intelligence Project in two functional domains viz :

  1. Accounts Receivables (AR)

  2. Key Performance Indicator Reporting on Delivery Performance (KPI)

Q: What was the IT / business challenge faced that led you to this project?

Alfa Laval India Limited (ALIL) wanted to get quick and actionable information in the area of Accounts Receivables so that the huge amount of paper based reports currently generated would be eliminated and receivables could be controlled.

ALIL also wanted to measure the performance of the company's deliveries to its customers. Its goal in this area was to measure the performance so that steps could be taken to improve the same.

Q: What IT solution / product / strategy was planned to overcome the above business challenges?

We planned to develop solutions using the Microsoft Business Intelligence Technologies

Q: What was the evaluation process and why did you choose a particular vendor?

We went with a tier 2 company whose directors are themselves very good on Computer applications as well as they are Chartered accountants. This gave us more flexibility and knowledgeable associates and at a very economical cost as compared to other Tier I companies.

Q: Scope of the project – geography, no. of users, systems, timelines for project execution from signoff to go live, etc.?

Approximately 3 months for each area after signoff.

Q: What major challenges (technical, managerial, process) did your organization face during the execution of your project or IT initiative and how did you address (surmounted) them?

There were no major challenges. As the reports were Excel based, the user acceptance was very high. Training was given to the users to use the various features of Excel Pivot Tables.

Q: What was the role of the partner (if any) and a value add in the implementation of this project?

Prosys, our partners, demonstrated the tremendous power which Excel Pivot tables have in doing data analysis provided data with proper dimensional modeling is given to Excel. Prosys also developed various 'intelligent' dimensions to enable exception reports and actionable reports. Some of major features of the solution are :

  1. Very extensive use of Excel Pivot tables was done to enable the end user to generate different views of data. The managerial users were able to get a big picture of AR and drill down to the business line or the branch level. The operating staff was able to drill down to the customer and the open invoice level. Analytical reports like top 20 customers etc were available in the same reports. Using just a couple of reports all the AR reporting requirements were met.

  2. Using the data collected for the purposes of AR, email solutions were written so as to email payment requests to customers.

  3. A unique solution to automatically split, zip and email the pivot table reports to all the branch offices was designed. Due to this solution the branch people were able to see the AR data only pertaining to their own branch in an interactive mode even when they were not connected to the server.

  4. In case of the KPI module, a dashboard was constructed showing the DOT (delivery on time) performance based on number of deliveries, DOT performance based on value of deliveries, Average lead times and average shipment delays was done. The unique part of this solution was that all the four dashboard graphs were coming from four different pivot tables, but all were connected to the same set of parameters using innovative VBA coding done in MS-Excel.

  5. Both the applications fully leveraged the tremendous power MS-Excel has as a BI client especially when connected to a database.

Both the applications used readily available tools and the company saved huge amounts on license costs by leveraging existing investments in MS-Excel.

Q: What were the business benefits generated / derived from the project / deployment? Any significant & measurable impact on business? If so please provide quantifiable numbers wherever possible. Please describe the financial return and measurable payback. An overview of the quantifiable benefits that underscore your project's success.

Benefits of AR

  1. The immediate benefit was a huge reduction in the amount of paper based reports which were being generated. As the reports were in electronic form in MS-Excel, they could be emailed easily to all concerned.

  2. The reports were immensely easy to use. With a training time of just a couple of hours, we were able to train all our users to use the various facilities which the report provided.

  3. All the different levels of management as well as the operating staff now were working on the same report, thereby confusion arising from referring to different reports was completely eliminated.

  4. The financial benefit in terms of control over the AR balances was astounding. Refer to the following table: (Amounts in crores)

 

Year

2009

2008

2007

2006

2005

2004

2003

Sales

 

916

842

741

637

613

527

393

AR at year end

 

177

168

172

172

172

143

   96

Ratio of AR to Sales

 

19

20

23

27

28

27

24


The data for the last 7 years is shown below. The AR module was introduced in late 2005. The trend of AR as a percentage of sales was on the increase over the past three years. After the AR module was implemented, the AR ratio to sales has shown a consistent decline. The sales over the period from 2005 to 2009 have increased by almost 50%, and yet the AR in absolute terms has more or less remained same, and in relative terms it has actually reduced.

Benefits of KPI

  1. Originally the KPI reporting was done manually. Since the volumes were very large, this report was available only at a summary level. This was also available only at monthly frequency. Different people were claiming different levels of performance, and as it was not possible to drill down to the order level, such different claims could not be validated. Crucial time in meetings was wasted in just trying to identify which was the correct performance measure.

  2. This automated module completely eliminated all manual work and bias in generating the KPI report. The report could be drilled down to the lowest level by all the users enabling complete transparency in reporting.

  3. The business advantage gained was phenomenal. See the following table :

Period

DOT Performance

Oct 08 – Mar 09

32%

Jan 10 – Jun 10

92%


The DOT (delivery on time performance) before the module was started was just about 32% average for the six month period from October 08 to March 09. After introducing the module, all the stake holders got a clear vision of their performance and were able to identify the problem areas. The performance of DOT substantially improved to 92% in the six months from Jan 10 to June 10.

Q: What was something indigenous or radically different about the project or initiative?

The entire solution was custom built according to our requirements using Microsoft BI Technologies.

Q: How did your organization change the way it does business as a result of this project?

The Branch accountants and Sales people were equipped with the information which made it easier for the collection process.

Q: Business user's acceptance is a key measure for the success of any project. A quote from the key business user of the project, solution deployed?

With this applications our coordination and follow up has become much easier with information at our fingertips all the time, no matter wherever we are located in India. Our image with the Customers has also gone up due to accuracy in information and immediate responses.

Q: What single "lesson learned" can be described in 20 words or less resulting from the above project?

An application which is simple and oriented towards the objectives can give much better business benefits. In short KEEP IT SIMPLE

Q: Has the project / initiative won any IT implementation award?

Yes this has won us the EDGE 2010 award.

Q: Future roadmap. What is expected life of this project? Is there anything else you've planned to do for it in the future?

We plan to use these technologies to create BI solutions for different areas like Financial Reporting, Sales Analysis, Order Analysis, Customer Profitability, Inventory Reporting etc.

Q: Something you would like to share with your fellow CIOs

Cost Savings in AR
The business benefits of AR have been tremendous. To make a notional calculation of the benefits, let us assume that without this solution in place, the AR ratio to sales would have remained the same at the end of 2009 as it was in 2005 end. If this is the case, the AR at 2009 would have been 257 crores, instead of 177 crores. So the company has gained a working capital reduction of over 80 crores.

Cost Savings in KPI
The improvement in KPI in delivery to customers has definitely improved revenues

Improving customer service
Due to a considerably improvement in the KPI performance, the customer delight in dealing with Alfa Laval has increased.

Employee Productivity Improvement

  1. The report printing and physically distributing the reports to different people at Head office and at the branch offices all over the country was fully eliminated.

  2. The pressure on the IT team to generate different views of the same data via different reports was eliminated. Now the users could themselves generate different reports. The IT team could concentrate on other important functions like implementing new functionalities in their MOVEX ERP etc.

  3. In the meeting room everyone referred to the same report – 'single version of truth'. There was tremendous improvement in productivity as the user could immediately drill down right up to the lowest level of detail without having to refer to any other report or any screen of the ERP system.


The employee productivity in generating the KPI reports has also increased substantially. The report is fully automated and available to all concerned by the time they come to office each day


Q: Final words on industry wide adoption of this type of project

Relevance of AR:
Every company in the manufacturing and services sector requires an AR monitoring module which can enable users to take quick action to collect over dues on time before they go bad. A module like the AR module developed for ALIL can help to meet this requirement.

Relevance of KPI:
As the competition mounts, it is essential to do all that is required to retain the customer. Delivering on time is an important issue in retaining the customer. Measuring this on a regular basis and reporting this to senior management has the effect of keeping the operations team on their toes. Such a KPI monitoring module is therefore of immense importance to the industry.

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