Fierce competition continues to mar the manufacturing sector, thereby intensifying the price war, customer churn, thin margins and limited cash flow.  At the same time, customers continues to demand variety, quality, superior service and lower price.

MIRC Electronics, a manufacturing company with two flagship brands Onida and IGO and about 500 product Stock Keeping Units (SKUs), faces a daunting challenge of managing product life cycle management. Estimating the demand of these products at each of retail outlets and ensuring availability on time is a big concern for the company’s management.

“Each challenge faced by our company is supported by an IT initiative like ERP, BI, demand management and price management system. The IT systems help in managing these challenges if not eradicate them,” says Ramesh Janarthanam, CIO at MIRC Electronics.

Managing Demand
Demand management from a SCM (supply chain management) investment ensures that sales are predicted closer to the actual sales, thereby helping to manage Work in Progress and Finished Goods inventory within benchmark levels. It has also increased the fill rate of MIRC Electronics from 65 percent to 80 percent.

The company has put a price approval system in place to approve the price increase or decrease and monitor the buying efficacy. To have better control on sales schemes run by the company, MIRC has implemented a unique tool on rebate management.

In today’s scenario, where a customer’s preference is the top priority, the ability to make changes in the design of a product without affecting production schedules is crucial. For instance, if MIRC wants to make a small change in the design of a product without affecting the assembly line, it achieves the feat using a Product Life Management (PLM) concept named Product Dossier designed and developed by a Pune-based software company. The company is extensively using VPN/VSAT connectivity to connect all its plants and branch locations.

IT for channels
It’s true that IT plays a crucial role in the growth of a manufacturing company. But what’s the use if the suppliers and partners are unable to leverage the technology? Keeping that in mind, MIRC implemented a price management system, wherein the dealer could know the net landing cost and Maximum Retail Price (MRP) of the product so that the latter can be flexible in offering further concessions to their customers.  

“We are highly focused on improving our partners’ IT infrastructure and information systems. As competition is growing and margins are shrinking, sharing business insights helps partners in managing their operations efficiently,” says Janarthanam.

ERP and Business Intelligence
The company started its ERP implementation in the late 1998 and went live in January 2000. MIRC also developed tools and methods to monitor and govern the performances of each functions of the organisation, thereby providing a means to continuously evaluate them with objective measures of Key Performance Indicators (KPIs) using ERP.

Having brought in the ERP culture, the company could bring an overall productivity in many of its critical business processes like sales, cash collection, treasury management, inventory management, procurement, price management and other such operations that are run within the set working capital norms.

“We have put a credit control system which revolutionised our sales operations. This system ensured continual working capital through value addition, thereby limiting the borrowing fund for treasury activities,” reveals Janarthanam while adding that in 2008 MIRC saw Rs 80 Crore cash flow improvement (saved by using the process) as outstanding (number of days) were significantly reduced BI initiatives have significantly improved company’s performance by providing an actionable intelligence to their operations. Business intelligence has given MIRC a better sales visibility and understanding of the value chain. These include solutions for cost and profitability analytics and solutions for operational planning and budgeting.

Looking at quick ROI
MIRC Electronics’ IT budget for 2009-10 is Rs. 6.34 crore.  The company wants to adopt the technology that improve operations and draw in faster ROI. It plans to deploy virtualisation, green initiatives and replace all CRT monitors with LCD this year. The company has recently upgraded all its SAP servers from RISC-based processors to latest power saving Itanium (server) processors.

“We have 12-15 servers running in non-Unix operating system, and by adopting server virtualisation, we are sure we can save 800 units/day of electricity that in turn will save around Rs. 8-10 lakh every year. Also we have around 240 CRT monitors, and if we replace all of them with LCD monitors, we can save another 26 units per day,” concludes Janarthanam.

vinita.gupta@9dot9.in