'Invest More In IT To Cut Overall Business Costs'

Hero Honda believes in automated production processes and leverages IT for the same. As per company officials, one motorcycle is produced every 15 to 18 seconds in Hero Honda’s manufacturing units. To handle this pace of production, the company relies on robust IT systems, which play a critical role in the SCM, HR, manufacturing, finance and other critical functions. In a tête-à-tête with Biztech2.0, Vijay Sethi, VP – Information Systems, Hero Honda, speaks about the company’s SAP-based IT architecture and other applications stitched around it.

What is Hero Honda’s IT strategy to counter the economic slowdown?

Until 2006-07, the auto industry registered a double-digit growth; however, the growth curve turned negative in 2008 by about 6 percent due to the recessionary trend. The counter offensive against this trend was either sustaining production cuts and the resultant drop in sales or creating additional demand. One way of generating demand during recession is to provide more value for the customer’s money; that makes his spending worthwhile. This objective can be achieved by cutting production costs. However, low market demand and high raw material costs proved as a double whammy for Hero Honda. The only way out was a comprehensive re-engineering within the organisation, thereby finding ways to reduce costs and improve productivity.

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IT came to the rescue at this juncture. So contrary to the general trend of cutting IT costs, we pumped in more money into IT to reduce costs across business processes. The new investment was targeted at putting in place more systems, improving workflows, automating certain processes and increasing productivity.

Conclusively, the strategy is to sweat out the existing IT assets coupled with making additional investment in required areas and no cutting down on IT budgets.

Tell us about the SAP-based IT landscape at Hero Honda.

We capture transactions on SAP R3 system. This core platform is integrated with SAP’s specialised applications like CRM that transacts business with our key dealers and Supplier Relationship Management (SRM), which is web-enabled and can be accessed by our suppliers. Internally, we use Business Warehouse (BW) and enterprise portal. All these applications run on SAP’s Netweaver platform and XI, which is SAP’s exchange infrastructure. We have also integrated SAP with our bar-coding system that captures information about all the motorcycles we make in real time. The data is captured back into the SAP from the bar-coding system. We also use various workflow applications based on Lotus Notes within the organisation.

‘Innovation’ has been a loosely-used word in the industry. It is also widely used with reference to Enterprise Technology. Could you share with us your thoughts on ‘innovation’?

The way enterprises deploy and use their IT infrastructure to the optimum should be considered the true definition of ‘Innovation’. For example, the way we have integrated our bar-coding system with SAP demonstrates innovation. As mentioned earlier, the information on motorcycles getting manufactured every 15 to 18 seconds is registered in the bar-coding system and absorbed back into the SAP, so we have made intelligent use of both the bar-coding and SAP systems.

The other example can be about some of the workflow systems that we have stitched together. When we raise a purchase order it triggers a workflow, which automatically creates a sales order for suppliers on the SRM portal. The supplier is acknowledged on the goods delivery via a Goods Received Note (GRN) and is informed about the quantity of goods returned or any unfulfilled requirements. This entire process is automated as a workflow in the system.

The company has also automated the information delivery to shop floor managers. They are informed about the status of the production schedule through SMS alerts. Earlier, it was done manually where the manager had to visit the office or make a call. The system is also equipped with pull-based SMS, which works after punching a particular code on the mobile. So instead of sending a mail or writing a note or calling the helpdesk, managers can pull information by sending an SMS that is triggered by the workflow developed in the SAP system. Thus, operations run very smoothly due to the IT backbone in place.