India's Maiden SAP ERP Run In The Coal Sector

A constantly moving workforce of 70,000; meeting commitments of 4000 customers, 1 laky tonnes of coal being dispatched on a daily basis; plying 10,000 trucks loaded with coal per day; handling 1 lakh different grades of coal- Singareni Colliaries Company Limited (SCCL) has a tough task at hand. This is not all, being a PSU it also has to adhere to Government laws and regulations. And to make all this possible, the IT platform company has to be robust, while also supporting the business scale.

Challenges with HR, Customer Data

Singareni Colliaries was initially operating with a distributed IT architecture. There was redundancy in applications, databases, etc at various locations. SCCL has operations in four districts of Andhra Pradesh across150 locations spread over a distance of 200 kms, frequented by the massive mobile workforce.

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A major challenge was deferred payment due to operational inefficiencies of transferring data from one location to another. On the customer side there was a lull of one month in raising the bill, which resulted in late payments. When the company is trading with as many as 4000 customers, late payments can have a huge bearing on the balance sheet.

The company wanted to undergo a Business Process Re-engineering (BPR) exercise for excellence improvement - one more trigger for the SAP adoption. Moreover, SCCL also wanted a platform that could be leveraged for adopting emerging technologies like mobility technologies, Radio Frequency (RF), web-based services and so on. The current architecture wouldn’t have allowed this.

These challenges drove the company to have a relook at the IT architecture. An internal committee of experts was constituted to recommend the best way forward. It was not a routine evaluation task for the committee since no other coal PSU in the country had adopted SAP. So, the best way was to learn from those who have already travelled the path. SCCL consulted Coal India; however, they had not implemented any ERP. The objective was to learn from their way of operations. PSUs with coal mining operations such as ONGC, NTPC, NLC (they have all implemented SAP), were also studied. The committee wanted to go slow and steady on this to make sure that they are making the right choice. Thus, it took about a couple of years for the evaluation process. This included interaction with user companies and IT vendors as well.

SCCL Selects SAP, Reaps Rich Dividends

After all deliberations, SCCL adopted the SAP ERP Application. The company wanted to go for an off-the-shelf solution rather than a customised one due to the complexity and scale of the business operations. “SAP’s core business is ERP, hence it has developed a comprehensive solution with all functionalities, bundled with a long-term support strategy that keeps abreast with emerging technologies and good alignment with SCCL processes,” said Satyanarayana. M, Project Manager-ERP, SCCL.

Implementation Best Practices

As part of the implementation SCCL deployed the ASAP methodology, and hardware and infrastructure was rented for blue printing and implementation. The project was managed by the steering committee and the IT staff trained on SAP technologies. Software was developed before implementation for smooth data migration and transparent policies were set for managing process change and adopting best practices.

Benefits

The overall experience of various business processes for SCCL employees has improved post implementation. The turnaround time of HR deliverables has reduced significantly. Earlier, for the mobile workforce, data transfer was done mid month. This resulted in late salary disbursals; however, after SAP salaries are deposited at the end of the month due to accurate maintenance of employee records.

Another major advantage has been on the front of receipt of increments, payment of quarterly bonus etc. Previously, quarterly payments were remitted at the end of the fourth month; however, now they get deposited on the first day of the fourth month. Therefore, the lull of one month has been eliminated.

The third advantage has been with regard to the retro functionality in the ERP. The changes in the payroll processing can be included going backwards. This helps the HR in making appropriate calculations for tax and other reasons.

In materials management, the SAP system has enabled holistic visibility of the inventory at all locations. Earlier, the information on the inventory was not available for all locations. This helps in charting out the procurement plan in days. Before, plans had to be made at least four months in advance.

“We have been able to set a lot of alerts, which has helped us in reducing ‘Stock Out’ situations,” said Satyanarayana.

The billing process has also improved drastically, where previously it used to take about a month to raise a bill now it can be done immediately as the stock is delivered. This results in faster payment realisation.

In the quality module, credit and debit memos can be raised immediately in response to grade slippage or enhancements.

Future Plans: Building on the SAP Platform

Singareni Colliaries is planning to develop Radio Frequency (RF) based attendance using the SAP platform. “We are also planning to design Web services to provide certain SAP data (on delivery positions, sales information and the like) for our customers,” said Satyanarayana.

E-Procurement, online bidding etc is another area that is being seriously looked into. Project Management is another important business operation. Massive investments go into project management; hence, this module will be a major advantage. Another area is plan maintenance, which involves large tool kits to extract coal, maintenance of that information, build in histories etc. “These are the immediate future plans under consideration,” Satyanarayana concludes.