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INTRODUCTION

AS organisations rely more on collaboration with

the partners to enhance their position in business,

they look beyond their traditional information

system boundaries. Many organisations use IT-based

inter-organisational information systems as a strategic

tool to link partners in the supply chain. GCPL is such a

case study from the Consumer Packaged Goods (CPG)

sector in India. GCPL has successfully implemented

three IT based IOS initiatives with dealers (Sampark),

with suppliers (Sahayog) and with retailers (Sampoorna).

The main objective of these IOS is standardisation of

inter-organisational processes and optimization between

the partners. This case study discusses the drivers for

planning, methodology and the CSFs for these IOS

initiatives. It is hoped that the findings would provide

insights for other organisations that plan to implement

IOS in their Supply Chain Networks.

INTER-ORGANISATIONAL SYSTEMS IN A CONSUMER

PACKAGED GOODS NETWORK: CASE OF GODREJ

CONSUMER PRODUCTS LIMITED (GCPL)

Anjali Kaushik

This paper reports a case study of the inter-organisational systems (IOS) at Godrej Consumer Products

Limited (GCPL). The paper provides valuable data on planning of IOS and its effect on supply networkcompetitiveness. GCPL has taken specific initiatives to integrate distributors, retailers and the suppliers

across its extensive supply networks. This study shows that different supply chain partners in an actor-

based business network may require separate information system planning and design. This case presents a

differentiated analysis of the design elements (e.g. relationships, processes, systems as well as change

issues) from the perspective of a major player in the Indian Consumer Packaged Goods (CPG) Industry.

This study highlights the need for coordination among various IOS initiatives and between network partners

and business managers of the key actor. It also focuses on the qualitative and quantitative benefits achieved

for all partners through strategic planning of IOS and adds valuable information to the business relevance

of IOS investments.

Key Words : Supply Chain, Inter-organisational Systems (IOS), IT Value, Critical Success Factor

(CSF), Consumer Packaged Goods (CPG), India

MANAGEMENT CASE

When planning systems have greater impact upon

organisational processes, especially across a number of

organisations, planning must be inter rather than intra-

organisational (Finnegan et al., 2003). However, little

formal thought is given to the planning of IOS processes

(Finnegan et al., 2003). Kumar and Dissel (1996)

recognised that the inter-organisational structures,design, implementation and operation of IOS are inter-

dependent. This means that inter-organisational system

development is affected by more factors besides

technology. Of these factors, planning is regarded as a

most important factor in influencing the success of inter-

organisational systems (Finnegan et al., 1998). It is

important to carefully plan for and architect these

systems, understanding that the nature of these systems

is quite different from planning at the organisational

level. There are concerns on amount and nature of

information to be shared between the organisations, trust

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80 qKaushik

between the partners, security concerns, roles and

responsibilities of people across the organisations,

infrastructure requirements, technology platform and

modelling of inter-organisational processes. The

management of a process across the organisation in itself

adds to the complexity. The cultures across the

organisations are different; therefore, there is a need for

cultural alignment in integrating processes across the

organisation. Not much work has been done in the area

of IOS planning. This study discusses the drivers and

IOS planning issues for GCPL.

The GCPL study also discusses the CSFs which

maybe important in the IOS domain. CSF occupies a

prominent place in IS research field. Rockart (1979)

defines CSFs as those few key areas of activity in which

favourable results are absolutely necessary for aparticular company to reach its goals. For obvious

reasons, the critical success factors are the areas of

activity that must receive due attention from the

management. CSFs have been one of the earliest and

most actively researched topics in the IS field. As a result

of such research efforts, we know a number of factors,

which influence an information systems successful

implementation, e.g. commitment of top management

and adequate funding. These factors are applicable to

IOS, since it is also a sort of IS. However, IOS are more

complex and multifaceted than the traditional

information system in terms of technological and

management issues. The GCPL case study brings out

certain CSFs that may need to be addressed for

successful IOS implementation and adds new insights

to the existing literature in IOS domain.

LITERATURE REVIEW

Supply chain collaboration has been strongly advocated

by the consultants and academics since the mid-1990s

under the banner of concepts such as Vendor Managed

Inventory (VMI), Collaborative Planning Forecastingand Replenishment (CPFR), and Continuous

Replenishment (CR). It is widely accepted that creating

a seamless, synchronized supply chain leads to an

increased responsiveness and lower inventory costs.

Several seminal studies have identified the problems

caused by lack of coordination and to what extent

competitive advantage can be gained from a seamless

supply chain (Lee et al., 1997; Chen et al., 2003). The

management of supply chains is characterised by high

degrees of difficulty, attributed in large part to the

complexity of the multiple relationships and interactions

between the trading partners. These interactions are not

just complicated by their volume and variation in the

processes, but also by the complexity inherent in the

dependencies existing between the parties in time and

space (Power, 2006). Organisations have been deploying

information technologies as a means of improving

information flows. Literature in the area of supply chain

management often proposes an extensive set of benefits

for the organisations which choose to invest in the

technologies which are designed to enable more effective

processes with trading partners (Ballou et al., 2000;

Cachon and Fisher, 2000).

These systems are enabled by different inter-

organisational systems (IOS). IOS are Information

Communication and Technology (ICT) based systems

that transcend legal enterprise boundaries (Bakos, 1991;Konsynski, 1993). The boundary-spanning aspect

implies a level of cooperation and coordination well

beyond that of the traditional arms-length relationship

that exists between organisations acting as free agents

in the market. IOS exist to support and implement

cooperation and strategic alliances between two or more

organisations. IOS are strategic assets as they enable new

business models. Kumar and Dissel (1996) define IOS

as software and system manifestation of inter-

organisational relationships. IOS represent a pattern of

interdependent relationships between the activities of a

given firm and those of the other firms (Kambil and

Short, 1994). IOS affect organisations at many levels

(Sumoi, 1994) and these systems go beyond mere

electronic data inter-connection and deal with the people,

policies and procedures (Konsynski,1992) as well as

power relationships (Webster, 1995).

Inter-organisational Systems (IOS) and

Collaboration

Johnston et al., (1988) define an IOS as an automated

information system shared by two or more companies,

to facilitate the creation, storage, transformation and

transmission of information. An IOS differs from an

internal distributed information system by allowing

information to be sent across organisational boundaries

through communication technology. The strategic value

of IOS has been well recognised for its real-time

interaction, higher transaction accuracy, more efficientand quicker payments (Hendon and Nath, 1994), rapid

response, reduced search costs, reduction in inventory

and tighter links to customers (Johnston and Vitale,

1988). These benefits enable all parties to have high

operational efficiency and capability (Angeles et al.,

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Intetr-Organisational Systems in a Consumer Packaged Goods Networkq 81

2001), and more and more corporations tend to adopt

IOS in order to gain competitive advantages. The above

definition of IOS encompasses many systems such as

extranets, EDI, Internet EDI, B2B e-commerce and e-

SCM. What they differ on are just the technologies used,

scope of application, stakeholders and so on (Grossman,

2004).

Current IOS literature focuses on describing the role

of information technology in enabling the transition from

inter-firm competition to cooperation (Kumar and Dissel,

1996). As organisations move towards closer, more

collaborative economic relationships, information

technology and IOS play an enabling role in making this

transition feasible (Clemons and Knez, 1988; Clemons

and Row, 1992; Reich and Huff, 1991).

There are a number of reasons for the formation of

inter-firm collaborations (Guglan and Dunning, 1993).These collaborations are formed for sharing of large

investments, pooling and spreading of risk and access

to the complementary resources (Guglan and Dunning,

1993). Economies of scale, specialisation, rationalisationand in some cases the motive of neutralising competition

by co-opting are also cited as possible reasons for thesepartnerships (Kumar and Dissel, 1996; Jaiswal and

Kaushik, 2005). Further, increasing the return on

investment by a geographically wider diffusion of thefirms products and services and thereby increasing the

product life cycle expectancy may also play an importantrole. Reduction in supply chain uncertainty is an

important possible motive for the virtual verticalintegration (Konsynski, 1993). This in turn helps in

gaining cost, cycle time and quality advantages over thecompeting supply chains in the Industry (Kumar and

Dissel, 1996). The key strategic advantage is through

collaboration within the supply chain to compete withother chains in the industry.

Supply Chain Network has been defined as a

structure of interdependent relationships between the

activities of a given firm and those of other firms in itscompetitive environment that influence each others

strategies (Kambil and Short, 1994). Competitive

success, to a large extent, now depends on how well the

entire supply network delivers value to its ultimate

consumers, relative to its competing supply chain

networks (Christiaanse and Kumar, 2000). Often-

mentioned features of such a network are a strong inter-

organisational design and an interactive and dynamic

set of relationships acting in concert with one another

for a common goal, bringing together core capabilities

of different organisations to accomplish business

improvements. One of the benefits of a Supply Chain

Network is the increased flexibility of linking actors

together. This provides a more agile arrangement for the

network to produce from actual customer requirements

as a starting point, and not on the basis of assumed or

forecasted customer needs. Fawcett et al., (2008) did a

study of 51 firms to understand the practices and

requirements for supply chain collaboration. Majority

of the firms (86%) identified information sharing andsystem integration as the topmost requirement for

collaboration in the supply chain network. Supply/

demand networks invariably involves more than one

organisational unit and often integrates business partners

such as customers, suppliers, and service providers with

a companys information infrastructure (Alt and Fleisch,

2001). It is important that the supply chain network areplanned and coordinated properly; else it may result in

suboptimal performance for different partners in the

value chain.

Gap in Terms of Good Planning in IOS

Most of the early research in IS planning was theoretical;essentially developing better conceptual models for the

internal IS planning (McFarlan 1971, IBM 1975,

McLean and Soden 1977, King 1978). These models

have evolved over the time in light of the changing

organisational role of IS (Ward et al., 1996).Business organisations are increasingly getting

networked with their business partners and they need to

incorporate the network issues in their IOS planning

process. IOS planning requires addressing the problem

of finding how diverse systems and platforms will be

integrated to meet the organisational requirements. The

conventional methodologies fail to explicitly address

such integration issues because they are from an era when

organisations created their own information systems and

cross-platform integration was not a primary need. These

shortcomings are in part because of the significant shiftsin business practices and technological capabilities in

the last few years (Kaushik, 2005). In addition, some of

the IS planning models may not have strong theoretical

roots, which might make it difficult to augment them to

suit in new contexts.

As there is a move towards systems which have

greater impact on the organisational processes, especially

across a number of organisations, planning needs to be

inter- rather than intra-organisational. There are factors

such as increased role of information, reduced

transaction and coordination costs and economics of a

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network and its effect which make the planning

environment with business partners different. The earlier

theories are abstract approaches to the network structure

and classification and do not provide comprehensive help

in answering the practical questions. IOS for supply

chain requires addressing the problem to find how

diverse systems and platforms would be integrated to

meet the organisational requirements. Practice also

shows that as a rule business participate in several

networks simultaneously and are involved in different

value chains for different products and services. These

networks may be independent or they may mutually

influence one another. In the process, they use different

IS/IT applications, depending on the business processes

to be coordinated.

While a few inter-organisational system planningmodels have been put forth in the recent years, each of

these models has its own weaknesses. For example, the

industry framework for e-business (Kalakota and

Whinston, 1996; Kalakota and Robinson, 1999) is a

broad-based framework that examines the significance

of technologies in the e-business. The focus of this

framework is to explain e-commerce technologies and

their capabilities. The framework does not provide

sufficient details to serve as a tool for IOS architecture

planning. Similarly, Zwass framework (1996) is a

general-purposed model which focuses upon the nature

of e-commerce infrastructure, services and products.

This framework also fails to address the concerns and

requirements of IOS architecture planners. Raghunathan

and Madey (1999) suggested an IOS planning framework

which focuses on the development of e-Business

Information System (EBIS), providing a three-

dimensional coordinate axis to classify business models

and to establish IOS architecture for a particular model.

While the Raghunathan and Madey (1999) framework

focuses on the information architecture for e-commerce

and is useful in aligning e-commerce information

systems to business needs, it fails to adequately addresshow the overall architecture of e-business systems should

be planned and designed.

Finnegan, Galliers and Powell (1999) conducted a

study to understand the IOS planning practices of large-

sized organisations in Ireland and the UK. Their study

is largely exploratory in nature and the focus is ondocumenting the IOS planning processes followed by

the companies with a view to improve upon them. The

study indicated that IOS planning is still in its infancy

and is largely ad-hoc. It also revealed that the companies

are still relying on the traditional IS planning approaches

and majority of organisations experience difficulties in

IOS planning. An analysis of planning activities of the

respondents showed that they are more concerned with

the systems issues than with cooperation issues. This

demonstrates the infancy of the IOS planning process

and illustrates the importance of developing appropriate

method for dealing with IOS planning in a network.

As IOS become more complex and started to have

significant impact, situations where one organisationdevelops a system and simply extends it to others will

be inadequate. This is especially true of IOS that require

alteration of business processes to achieve greater benefit

(Swatman and Swatman, 1992). Limited research has

been done in the area of IOS planning for Supply Chain

Networks. Most of the earlier frameworks do not

consider managerial and organisational problems,change management issues in defining how planning

should be done. The conventional IS planning

frameworks may help the business strategic planners to

understand how to rapidly plan IS applications at firm

level but may prove inadequate when considered forinter-organisational systems. Therefore, though some

studies have been done in the inter-organisational

domain, no comprehensive study seems to have been

done that fills up this gap in the literature. This case study

attempts to bring out an approach to IOS planning in an

actor-based supply chain network.

Inter-organisational Systems in CPG Industry

Researchers in inter-organisation systems have

developed a variety of theoretical arguments to explain

the formation and structure of IOS enabled alliances

between the organisations. These arguments are usually

derived by adapting and extending existing theories ofthe organisation from intra to inter firm behaviour.

Bensaou and Venkatraman (1996) examine different

theories for inter-firm cooperation. The IOS in a

vertically integrated supply chain has sequentialdependency i.e. the output of one unit becomes input

of the other unit (Kumar and Dissel, 1996). For

example, the marketing plan becomes input to

production and/or purchasing plans. With sequential

inter-dependence, there is a direct directional

dependence between the units (Robey and Sales, 1994).

This case study provides evidence that in a vertically

integrated firm, IOS add value at all points in the supply/

demand chain. This information is valuable.

Traditionally, the IOS in such supply/demand chain was

driven by the key actor. The evidence from this case study

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suggests that IOS planning, design and implementation

including cost sharing may be collaborative as all the

players stand to gain in supply network. It also discusses

the issues involved and the critical success factors

(CSFs) in the implementation of these IOS. This case

study examines the IOS usage and its effect on the firms

competitiveness closely.

METHODOLOGY

Due to complexity of IOS planning process and the

uniqueness of each Supply Chain Network, it is difficult

to suggest a single best method for planning of inter-

organisational system. For example, there is no best

approach in integrating the external supply chain with the

internal production and inventory management processes.

In such a situation, the case study research method is often

employed (Eisenhardt, 1989; Benbasat et al., 1987). Case

research is particularly suited to the situations where

current theories seem inadequate (Eisenhardt 1989; Yin

1989). It gives a possibility to be close to the studied object

(firm), enabling inductive and rich description. Case

research is also a strong method in the study of processes

as it allows the study of contextual factors and the process

elements in real-life situation. Case study has been

recommended as a suitable approach for the study of

networks (Halinen and Tornroos, 2005).

This paper is based on a case of the Godrej ConsumerProducts Limited (GCPL) which is a leading CPG

company in India. GCPL was selected for case study

for the following reasons: First, GCPL is a major player

in the CPG industry in India. Second, it has successfully

formulated and implemented an IOS strategy for its

supply chain and realised significant benefits for all

partners in the network. Third, if we observe the

performance of CPG companies in India especially since

October 2008 (which represents the current economic

downturn), GCPL has the most positive performance and

has outperformed the Sensex compared to the otherplayers in the CPG industry.

To get through the description of this case study,

several informants who had good access to the study

issues and the case network were taken. The primary

data for this study was collected during 2006 - 07 and

was later updated. In this case study the first set of data

about the case companys structure and business

performance was collected from its publisheddocuments and the website. The secondary data was

also collected from various relevant industry

publications, industry reports, magazines etc. The

second set of data about the Supply Chain initiatives

was collected through the interviews and discussions

with its Chief Information Officer (CIO) and senior

executives from its IT, finance, marketing and operation

functions. A total of seven interviews were conducted

across the functional departments. Apart, there were

two sessions from across the functional areas where

senior executives from the functional areas and the CIO

explained their processes end to end. Interviews and

qualitative insights were also obtained from the dealers

and suppliers of GCPL. Two of the suppliers, five

distributors and three retailers were contacted for the

purpose of this case study. The third set of data on the

post-implementation scenario was collected from

various published documents and industry analysis

reports (see www.indiainfoline.com;www.godrejcp.com), as also interviews and discussions

with senior executives at GCPL. Specifically, the post-

implementation information was collected from the IT

head, senior managers in production, marketing and

purchase departments. The case study examines the

supply chain network re-design issues at GCPL for

integrating its extensive supply chain. The details of

the IOS planning strategy and the planning process are

also discussed as part of the case study.

CPG SECTOR IN INDIA

The CPG segment ranks among the leading

implementers of Information Technology (IT) in India.

Some of the prominent areas where CPG organisations

harnessing the power of IT include supply chain

management, dealer management, customer relationship

management and sales force management. The size of

the CPG industry in India is close to INR 500 billion

which is approximately US $ 11.5 billion

(www.indiainfoline.com). Low margins and high

volumes characterise the CPG sector. While the level of

disposable incomes determines the overall sector growth,

the market has already been segmented and sub-segmented. Companies have launched products at a

number of price points to drive up volumes. New

products are being launched in niche segments, and old

products re-launched. Brand equity drives the customers

purchase decisions, and is the key to gaining market

share. Also, competitive pressures have hiked the

advertising budgets of most players. Besides, a profusion

of promotional schemes are being offered. Most players

are struggling to maintain top line growth, despite

incurring heavy advertising and sales promotion

expenditures.

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A lower price differential between the organised

and the unorganised sectors from reduced excise duties

is now allowing the former to grow at the expense of

the latter. The organised sector also has a superior

distribution reach. Although most of the product

categories are still in the growth phase, a few broad

categories, like detergents, have reached a mature phase

in the urban markets. For the past five years (2000 -

05), the organised sector has been focusing on rural

markets, which are perceived to drive future growth in

the industry and which, to a very large extent, are

dominated by the unorganised sector players

(www.indiainfoline.com). After the slow growth

registered during the period 1999 - 2003 due to price

wars and below-par monsoons, the CPG industry as a

whole is now focusing on extending reach into the high-growth rural markets, investing in increasing in-house

production capacities to achieve lower cost per unit and

improving the efficiency of their marketing

(advertising, sales promotion and channel

management) programmes.

Key Industry Trends and Initiatives

The secondary research on CPG sector in India and

interactions with the business and IT managers at GCPL

indicated that the CPG players in India want to drive

volumes and gain market share more than ever before.To achieve this growth agenda industry players are

taking various IT and market initiatives around one or

more areas such as rural marketing, streamlining of

distribution channels, increasing sales by driving

channel width, re-orienting business focus from brand

management to business management, deploying IT

solutions to better manage their procurement anddistribution etc. There is a strong MNC presence in the

Indian CPG market and out of the top 10 CPG

companies four are multinationals while two others

have significant MNC shareholdings. Unlike several

other sectors where multinationals have entered after1991, MNCs have been active in CPG sector in India

even before 1991.

CPG sector is poised for further growth in India

because of the emerging opportunities and strong

fundamentals developing in the economy. The future

growth may come from newer segments such as the

youth and through increased rural and small town

penetration. Internet and e-commerce may further

change the dynamics of this industry helping the

companies improve their procurement, distribution and

selling efficiencies.

CASE BACKGROUND

GCPL (www.godrejcp.com1) is a major player in the

Indian Consumer Packaged Goods (CPG) Industry with

leadership in personal, hair care and household and fabriccare segments. GCPL is a part of the Godrej Group which

is one of the largest engineering and consumer products

companies in the country. Godrej Group was established

in 1897 and has since grown into more than a $1 billion

conglomerate. Companies operating under the groupumbrella are involved in a wide range of businesses -

Godrej Consumer Products Ltd (GCPL) is a part of the

Godrej Group.

The corporate headquarters of GCPL are in Mumbai,

India. GCPL has state-of-the-art manufacturing facilities

at Malanpur (Madhya Pradesh), Guwahati (Assam),Silvassa (Uttar Pradesh) and Baddi (Himachal Pradesh).

On the warehousing and distribution side, it has four

Plant Warehouses (PWH), four Regional Warehouses

(RWH), 33 CFAs (Carry and Forward Agents) and about

1200 distributors covering around 0.6 million Retailers.

It has more than 300 suppliers. The organisation has

adopted Total Quality Management (TQM) system and

the factories have received ISO certifications. The main

product-lines of GCPL are toiletries, hair care, household

care, fabric care and body care products. The groups are

based on the product lines. GCPL is amongst the largest

marketer of toilet soaps in India. It is a leader in the haircolor category in India and has a vast range of products.

GCPL is also the preferred supplier for contract

manufacturing of toilet soaps to some of the well-known

brands in the country.

The philosophy at GCPL is reflected in their mission

we are dedicated to deliver superior stakeholder value

by providing solutions to existing and emerging

consumer needs in the Household and Personal Care

business. The company achieved a revenue of INR

6573.2 million (146 mn USD) in the financial year 2005

-06. It had a turnover of INR 9,532.3 million in thefinancial year 2006 - 07. GCPL has a global presence

and is operating across more than 30 countries in the

world. GCPL implemented an IT initiative (Sampark)

for outbound operations to capture the primary sales. It

successfully extended this initiative to the suppliers and

the retailers to enable end-to-end information sharing

across the supply chain. The new distribution and supply

chain system based on a replenishment logic has helped

GCPL to reduce the stock outs at various levels in supply

chain, thereby increasing the availability of products. It

has also helped to move from being a traditional Push

operation to becoming a Pull Operation. Continuous

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communication and data sharing with raw and packaging

material suppliers, third party manufacturers and CFAs

ensures optimal finished product inventory levels and

adequate marketplace availability. Efficient distribution

and supply chain management and an efficient collection

mechanism have contributed to continue working on the

negative networking capital. Further, besides significant

cost optimisation and inventory minimisation, the IT

infrastructure contributes significantly towards

Knowledge Management by enabling access to the

archived learning across several functions. The

introduction of data warehousing products has improved

the interpretation of sales data and comprehension of

market dynamics. The focus of this case study is on the

process of IOS planning in GCPL. It highlights the

impact of the re-designed IOS in realising value for allbusiness partners.

INTER-ORGANISATIONAL INFORMATION

SYSTEMS AT GCPL

For GCPL, the thrust on IT started about a decade back,

when as a group it decided to adopt ERP across the

enterprise. In 1995 - 96, GCPL was one of the early

companies in India to adopt ERP. It selected MFG/PRO

as the ERP package. In 2000, GCPL decided to look

beyond ERP and leverage the internet to the maximum

possible extent. While ERP MFG/PRO had helped

GCPL significantly to gain benefits within the

organisation; the new IT initiatives were to connect the

business partners outside the organisation. The GCPL

IT team felt that MFG/PRO had also not kept pace with

the market developments. MFG/PRO has a de-

centralised architecture and did not support B2B, dealer

or supplier networks.

At this time, Accenture was hired to prepare the

Strategic IT Investment roadmap for the next five

years. The methodology involved a cross-section of the

organisation in co-creating an IT investment roadmap.

Inputs were also taken from the annual IS plan of GCPL.The entire planning effort for the supply chain network

was spread across three programmes. The main

programme was to support integration with distributors.

It was extended to the suppliers and retailers in the

subsequent programmes so that the entire supply chain

was integrated end-to-end.

ANNUAL IS PLANNING PROCESS AT GCPL

At GCPL, the IS planning is an annual exercise. The

company has an existing, well-documented

methodology for IS planning. The annual IS plan is

initiated by the Chief Information Officer (CIO) and

led by the Chairman. The CIO also participates in the

general strategic business planning. The IS plan begins

by taking requirements of IS applications and the

projects from all functional departments. The average

size of the IS planning team is 12 people. GCPL also

has a large IS department consisting of more than 35 IS

professionals. The IS planning team consolidates the

current requirements and prepares a budget. It also does

a review on the status of the IS projects which were

initiated in the previous year. The entire information is

presented and discussed with the top management with

participation from the functional heads where required.

Based on these discussions, the IS plan, projects and

priorities are decided. The IS planning documentincludes recommendations on IS policies and

procedures, investment priorities and resource

requirements. It does not include detailed issues such

as application architecture, technical architecture and

service architecture. In 2006 - 07, the annual IT spend

of GCPL was INR 70 million ($1.56 mn).

STRATEGY FOR IOS PLANNING IN GCPL

The main objectives of the IOS plan at GCPL were

standardisation of inter-organisational processes and

optimisation between the partners. These requirementsled GCPL to conceptualise three IT initiatives Sampark,

Sahayog and Sampoorna. These IT initiatives were

conceptualised in line with the strategy document

submitted by Accenture. It also had inputs from the

annual IS plan of GCPL.

GCPL identified three basic elements for IOS

planning in its network: communication, cooperation and

integration. Communication became the backbone for

cooperation and integration. GCPL realised that in case

of distributors, better connectivity and communication

was of importance. These requirements gave rise to an

initiative for Distributor Management System (DMS)

called Sampark (a Hindi word meaning communication)for connecting the distributors. In case of suppliers, the

focus was required to be on cooperation. Sampark was

extended through another initiative called Sahayog (a

Hindi word meaning cooperation) to connect the

suppliers. This was followed by an initiative called

Sampoorna (a Hindi word meaning complete) to integrate

the retailers into the existing IT initiatives. The Sampark

initiative forms the backbone of supply chain. The

Sampoorna and Sahayog IT initiatives connect the two

ends of the supply chain. All the above IT initiatives and

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the current information system investments at GCPL are

in line with the strategy document on IT submitted by

Accenture earlier.

DEALER MANAGEMENT SYSTEM (DMS)

INITIATIVE: SAMPARK

The supply chain for GCPL consists of movement ofGoods from the Plants (factories) to the Plant warehouse

(PWH) to Regional warehouse (RWH). From RWH, the

Goods move to CFA and then to Distributor and then to

Retailer and finally to the Customers. While the product

flow is sequential, the information flows are automated

through the information system described below so that

information is available for planning across different

points in the supply chain much before the physical

movement of Goods.

PRODUCT FLOWGCPLs initiative to integrate itself with its distributorscalled Sampark (communication) successfully

integrates 450 distributors directly and another 750

distributors indirectly into the supply chain. One of the

challenges the company faced 3-4 years back was to

bring the distributors into the IT infrastructure. The

need came because of the non-visibility of stocks at

the distributor end. GCPL had to entirely depend upon

their estimates, intuition and knowledge of the field

force. GCPL has around 1200 distributors of which

around 400-450 are A-class distributors contributing

75-80% of the total business. Remaining 750-800

distributors are B and C class distributors. GCPL usedPilot with incremental and phased approach for

Sampark. It was essentially a vendor driven (WIPRO)

initiative. To start with, GCPL used project pilots at 25

distributor sites. It took GCPL 18 months from

conceptualisation to the first roll-out to a distributor.

Sampark is a combination of more than one product.

GCPL has used a combination of business applications

to integrate its distributors. While all the distributors

are running a common business application, the

application is different centrally. These diverse

applications are integrated with a common

replenishment engine using internet. The underlying

business concept behind this information system

initiative is based on replenishment. It monitors the

inventory levels at distributor end and based on that it

suggests a replenishment plan. The distributor has to

furnish information on sales to CFA. Information onthe current stock levels and Goods-in-transit in-turn

flows from CFA to distributors as also to GCPL. The

system considers all the above three things to determine

the order level by considering the replenishment logic.

IT Solution Selection Process

The IT Solution design had to consider the preparedness

and skill level with the business partners. The initial

challenge was that the distributors were not open to

sharing the data. Also the technical challenge was that

most of the distributors were using some software or

the other. The distributors felt that GCPL will get

insights into their data and they had an apprehension

Plants(factories)

Plants

Warehouse

(PWH)

Regional

Warehouse

(PWH)

Carry and

Forward Agents

(CFA)

Distributor Retailer Customer

Figure 1: Supply Chain in the GCPL Network

Figure 2: Replenishment Model for Class a Distributors:Information Flows

Daily Closing Stock and

Receipt Information Order

Confirmation

Carry and Forward

Agent (CFA)

Shipping and

invoicing

details

Location wise

stock

MIS Reports

(Input for forecasting)

(Stock Report Fact, CFA, Dist.

HO

Regional

Ware house

Plant

Ware house

Factories

Distributors

Broad Vision

Application

Central

Database

Broad Vision

Database

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supplier would like the distributor to share the package

with any other supplier. The distributor has to customise

the ERP to meet the overall requirements of the supplier.

In most cases, the financial support for the package is

also provided by the supplier.

Implementation Details for the DMS

Initially the initiative was Pilot tested on 25 distributors

and was used for day-to-day billing, invoicing and

payment processing. At the back-end, GCPL developed

a replenishment engine based on Broadvision platform.

The current information system architecture has 450

distributors, who use BOTREE as ERP. This solution is

desktop based and the software is called Sampark.

Besides this, GCPL has 33 CFAs who use MFG/PRO as

ERP. The current system works on data from 33 CFAs

and 450 distributors. The 450 distributors have internet

connection and the 33 CFAs are connected on WAN.

This data is collected centrally into the broadvision

database. Broadvision application layer has got the

replenishment formula (Sampark Order Replenishment

System).

At the end of each day, 450 distributors log on to

the BOTREE ERP programme. This initiates the data

transfer process and takes data and transmits it to the

central processor. From CFAs also, GCPL gets the sales

data on what has been supplied to the distributors duringthe day. Based on this data, invoice details are generated

that their data will be shared with other distributors.

GCPL considered three options to overcome these

challenges.

Option 1 was to write 450 interface programmesindividually for all distributors. The distributors were

using some proprietary software for recording their day-

to-day transactions. Extracting the information from theirexisting software meant coding about 450 extract

routines. First this was a big task and then sustaining

450 programmes was another difficulty. Therefore, this

option was ruled out.

Option 2 was to develop web based data entry form

on internet. Here, the distributors would come to web-

site at the end of the day and then fill all the details.

However, considering the low quality of net connectivity

at most of the distributor locations and the time required

to fructify this option, it was ruled out. Also, it would

have been a time consuming process and it was difficult

to gauge the accuracy of the data entered.

Option 3 was to customise a mini-ERP for them.

GCPL considered this option. Chennai-based BOTREE

specialises in developing ERP for CPG Sector.

Therefore, GCPL obtained the BOTREE ERP solution

from the company BOTREE Software International

Limited based in Chennai (India) and decided to

customise it. It took GCPL 4-5 months to implement

and customise the solution at distributor end andconvince them to use it instead of packages which they

were using earlier.

The second part of this was to develop a replenishment

engine which would run on the data collected by all the

mini-ERP of the distributors and generate a sales order

which would be processed by the CFA. GCPL has used

J2EE compliant commerce server: Broadvision one-to-

one Enterprise for the Central Replenishment engine. This

system works on a portal framework. Deployment of new

functionalities is done in a modular way, without affecting

the user interface or security aspects. This typifies theclassical three-tier technical Architecture which can scale

up to cater to practically over a million users. The GCPL

team selected IBM MQ series as the middleware which

ensures the flow of data across all these 450 locations in a

secure framework.

However, one of the major limitations of the existing

architecture comes from the fact that most of the

distributors are in fact using a separate ERP for each of

their suppliers, although technically one package would

be able to service all the suppliers, the reason being, the

supply chain planning relates to sensitive sales data, no

Table 1: SAMPARK Project Implementation Details

Scope Cover 450 Distributors

spread across India

Implementation Vendor Driven Initiative (WIPRO),

strategy/ Incremental and Phased Approach ,

approach Use of Pilot Sites

Timeline 18 Months from Conceptualisation

to the First Roll-out to a Distributor.

Resources and Sampark: Internal Team of 5 people.team structure Business Led Project

Description of Consists of Sampark DMS(Distributor

solution Management System); Vendor-Botree

components and Software International Ltd.-Chennai

suppliers of

the different

components

Component- IT Investment Amount

Sampark Web SAMPARK:Software cost=INR 4.5 mn

site ; Vendor- (0.1 mn USD); Hardware cost= INR

BroadVision 10 mn. (0.2 mn USD) ; SAHAYOG:

INR 2 mn (0.04 mn USD)

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88 qKaushik

to the distributors. Therefore, the distributor knows that

he is to receive these invoices in the next few days. The

distributor marks all the invoices he receives. The

invoices not received represent goods-in-transit. Data

accumulation is done by 2000 hours everyday. The

replenishment engine starts running by 2200 hours. By

3-4 am in the morning, everything is set and CFAs get

the additional stock that is to be shipped to the

distributors. Inventory level is maintained in term of

number of days, say, in terms of 10 days of sale. It takes

the record of last 30 days sales and then the future

expected sales and orders are generated on per day sales

basis. The Sampark initiative for these 450 distributors

and 32 CFAs was completed in 2005.

Replenishment for A-class distributors is done on

a daily basis and for B and C class distributors; it isdone on twice a week system. For B and C class

distributors GCPL did not want to give the ERP

software. This was because it is not easy to maintain

the software at so many distributed sites. Also, these

are small distributors and most of them do not even

have personal computers. The other issues with small

distributors are lack of IT awareness and lack of IT

staff. These distributors are also located at remote

places and providing them technical support would not

have been easy for GCPL. Based on these

considerations, for these 750 distributors, GCPL

thought of a different solution so that the investment

was also minimised. These small distributors call CFA

two times a week and read the sales and stock data over

the phone. CFAs key in the data by logging on to the

website and then the data is taken backwards like in

case of A-class distributors. This system was deployed

in 3-4 months. In this way, GCPL is now connected to

all its distributors.

For proper planning and implementation of

Sampark, two consultants Broadvision and Wipro were

hired. While Broadvision was associated with building

of the back-end logic for replenishment engine, Wiprowas associated with the roll-out on distributor side.

Wipro was selected because it had high geographic

coverage and a good support model. The basis for

financial justification of this IT initiative was the

anticipated reduction in stocks and the consequent

savings from the reduced inventory levels. The projectteam consisted of 5 internal people and the consultant

team. Another objective of the project was to provide

the daily secondary sales and stock information to its

field force, so that better informed decisions could be

taken.

EXTENSION OF SAMPARK TO GCPL

SUPPLIERS: SAHAYOG

The gap in information flow between GCPL and its

suppliers lead to frequent emergencies and unnecessaryextra inventory at both the ends. Because of this, it was

difficult to synchronize procurement with a stable

production environment. Besides, the administrative

efforts required to align the suppliers on GCPLs

requirements, launch new products and fulfilltransactional obligations were quite high. The GCPL

management ultimately desired to move towards an

inventory system which would be completely managed

by the Vendor.

Sampark was successfully extended to its suppliers

through a separate initiative called as Sahayog whichmeans cooperation. Sahayog was planned in year 2004

and was commissioned by the end of year 2006.

Sahayog was developed on the Broadvision platform.

Besides, the licenses and hardware cost of Broadvision

(already incurred for Sampark) and additional

development effort required for Sahayog was INR 2

million ($0.04 mn). Based on the distributors sales,

GCPL generates orders and informs the regional

warehouses on the quantity which is shipped to the

CFA. Thus, CFA inventory level is also maintained at

the minimum. The data from the regional warehouse

is shared with the plant warehouse and based on it, theplant warehouse decides on the quantity that is to be

shipped to the regional warehouse. Based on this, the

manufacturing plants derive the quantity that is to be

shipped to the plant warehouse. This information helps

GCPL to finally decide on the quantity of different

products to be produced at each of the plant. Based on

this, the supplier is informed of the quantity that is to

be dispatched. Thus for GCPL, Sahayog is like an

extension of Sampark. Also, now production is done

on the basis of demand which ensures that there is no

over production. Therefore, a core IT initiative needs

to be identified in the business network. This coreinitiative will depend on the individual condition of a

firm and its business environment. This core initiative

may be extended to other partners in the network

through separate planning and design.

GCPL has used Pilot with phase in approach to

extend the Sampark initiative to suppliers. The top 100

suppliers are on the portal and are using Sahayog. The

portal has allowed a firm communication channel to be

established between GCPL and the suppliers, wherein

key tactical information like dispatch and inventory

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details, finance history is regularly being shared and used

effectively. The phase I of the Sahayog which dealt

primarily with information sharing and building trust

has been completed and GCPL is now moving to the

next phase of inventory management which is Vendor

Managed Inventory (VMI).

IOS PLANNING IN GCPL AND

COORDINATION

IT enhances the coordination of economic activities by

reducing coordination costs, and can therefore improve

firm performance and productivity (Shin, 1999). The

redesign of inter-organisational processes with the use

of ICT plays a leading role in improving coordination

among the various partners in the business network

(Christiaanse and Kumar, 2000). GCPL is also

implementing the concept of VMI to overcome the

inventory problems in addition to the implementation

of the IOS initiatives. The planning cycle of GCPL used

to be monthly, and this has now become daily. The

improved planning has paid off, mostly in stock

reduction. On an overall basis, inventory level has come

down by almost 50% and sales have gone up (see figure

4). The extension of Sampark to suppliers through the

Sahayog initiative has further improved inventory

planning in the GCPL network. Earlier the GCPL

suppliers used to plan inventories on a monthly basis.After the Sahayog initiative, the planning cycle has

moved to a weekly basis. Therefore, the implementation

of ICT initiatives in the network does improve

coordination between the partners, however, in case of

more than one IT initiative, the coordination between

the individual initiatives is also important; else it may

lead to sub-optimal performance in the network andaffect the performance of all partners. This is because

the different network modes are dependent on one

another in planning and manufacturing their finished

goods and raw material inventories.

INTEGRATION OF RETAILERS TO SAMPARK

INITIATIVE: SAMPOORNA

In the next phase, GCPL is trying to integrate its 0.1

million retailers through innovative usage of

technologies such as PDAs in a separate initiative called

as the Sampoorna which means completeness and

integration in Hindi. This initiative is planned for the

year 2007 - 08. The system will be based onreplenishment logic again. With this, the retailers will

also come into the current IS architecture. The

implementation of this programme started in March

2007.

The challenge for Sampoorna initiative is that the

retailers will not be using any system and cannot beconnected directly into the network. To get data from

them, GCPL will be using PDAs and mobile application

for capturing retailing and Non Sampark Distributors

data. GCPL plans to use the field force which used to

visit the retailers earlier to get orders to also get the stockdetails using PDAs. This data from the retailers would

be passed on to the distributors with Sampark who will

then synchronise the data. Thus there is no overhead in

terms of extra cost for the retailers. Each A-class

distributor will serve 200-300 retailers. Also, only those

0.1 million retailers would be covered which are under

the 450 A-class distributors. The Sampoorna project gotcompleted by the end of year 2007. Thus, the information

system planning in the GCPL network consists of

extending the Sampark initiative to suppliers and retailers

through two more initiatives called as Sahayog and

Sampoorna. The supply chain planning logic isessentially replenishment based and is derived from the

Sampark initiative. Going forward, GCPL is planning

to change its ERP from MFG/PRO to SAP R/3.

MIGRATION FROM MFG/PRO TO SAP R/3

In 2000, GCPL decided to look beyond ERP and leveragethe internet to the maximum possible extent. While ERP

MFG/PRO had helped GCPL significantly to gain

benefits within the organisation; the new IT initiatives

help to connect the business partners outside the

organisation. The management team at GCPL was of

the opinion that since MFG/PRO had a de-centralised

architecture it may not support B2B, dealer or suppliernetworks easily. Also, according to them, MFG/PRO had

not kept pace with the market developments. The success

of above initiatives was because of the organisational/

top management push and now the expectations are highfrom the information systems across the organisation.

What is to be shipped is completely generated by the

system and there is a complete dependence on the system.

Therefore, it is critical that the system functions properly.

The technical challenge was to ensure that 5-6 software

from different vendors (Botree, WIPRO, Broadvision

and IBM) work together. If any of the individual

applications fails, it would affect the complete system.

Thus, sustaining these diverse systems is a challenge.

Also, whenever any customisation or up-gradation is

there, it is difficult to incorporate it across all systems.

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90 qKaushik

Therefore, the GCPL team decided to have SAP at the

central level. It believed that SAP would be more robust

as it was based on a centralised system. The

implementation of SAP was started around March 2006.

The business logic for the Supply Chain was kept the

same but the central system was placed under SAP in

this arrangement.

CRITICAL SUCCESS FACTORS IN

IMPLEMENTATION OF INTER-

ORGANISATIONAL SYSTEMS IN GCPL

This section does not cover the CSF for traditional IS

such as top management support, communication,

training etc. The insights obtained in the process of

implementation of the IOS, the interview findings and

the literature review are combined to list some of the

CSFs in implementation of inter-organisational systems

at GCPL. These include shared vision, change

management, cross-organisational project team, inter-

organisational business process re-engineering, process

ownership and strong project management.

s Shared Vision: Before the launch of the IOS project,it is important that the company and its business

partners share a common vision for these IOS

systems. It is important to communicate the blueprint

and the objectives of the IOS with the business

partners to reach consensus on the vision. Thebusiness partners should be asked to give their

feedback which should be incorporated wherever

possible. The shared vision of IOS among all

stakeholders would reduce the divergence of opinion

in the implementation process and in turn lower the

risk and shorten the period of IOS project.

s Change Management: Change management is acritical issue in planning information systems in

inter-organisational domain. Proactive change

management requires companies to address the right

structure, policy, processes and performancemeasures with all the entities affected by change.

Companies are handling change management and

project management issues by ensuring regular and

focused communication and by organising training

for the partners. The implementations are essentially

phased so that the new system is introduced

gradually and the change can be managed. The

project management team needs to have committedpeople with strong project and change management

skills to manage change across the external value

chain. It is also important to identify and involve

strong and key partners in the pilot phase. The

success with the initial implementations plays a

significant role in extending it to other partners.

Bringing the distributors into the informationsystems architecture was a big challenge for GCPL. The

distributors were not open to sharing data. Also the

technical challenge was that most of the distributors were

using some software or the other. The distributors felt

that GCPL will get insights into their data and they hadan apprehension that their data will be shared with other

distributors. GCPL needed a solution that was not a

technical challenge for all concerned and was aligned to

the business logic. GCPL also realised that the initiative

can only be successful if the distributors see benefit in

adopting it. Till 1-2 years back, GCPL faced stiff

resistance to their Sampark Initiative. However, slowlythe distributors realised the benefits from the system and

have started participating actively in it.

GCPL considered various options to overcome the

resistance from distributors. Training was considered as

an important element of the strategy in the change

management process. To convince the distributors,

GCPL made a team of sales manager and 4 Officer

Executive level people (one for each region) and they

were made a part of the Sampark initiative. Each of the

450 distributors was extensively trained by a special team

of 13 personnel (drawn from the sales function) withthe help of Wipro. GCPL educated the distributors on

the benefits of using the system and assured them of

increased Return on Investment (ROI) within 4 months

of usage. The distributors slowly saw merit in adapting

to the system and were gradually convinced about that

solution and how it would be beneficial to them and to

GCPL. While GCPL benefited by a daily visibility of

the retailing information, the distributor benefited from

much lower inventory carrying costs.

Like in Sampark, the most critical issue in Sahayog

was to manage the resistance from both the purchasedepartment and suppliers. The concern from the purchase

department was more related to the security of

information being shared. They were concerned about

whether a particular supplier could see the price related

information pertaining to other suppliers. GCPL

arranged a detailed demonstration for the suppliers. Once

the suppliers understood the benefits of opening a

communication channel using internet securely, they

helped to arrange supplier meets and participated in the

trainings. In order to measure the benefits and evaluate

the efficacy of Sahayog, Key Performance Indicators

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such as number of out-of-stock instances, administrative

time and raw material (RM) inventory were set and

measured periodically. Supplier meets were conducted

periodically even after the site went live to take care of

any operational issues and queries.

s Inter-organisational Process Re-design: This

implementation has re-organised the push-sales

tactic followed before with pull-based operations.

Now, the distributor invests smaller capital, forshorter time-periods. Also, product stagnation on the

distributors end is reduced, and there are fewer

chances of scarcity of a particular brand in the

marketplace. Invariably, this translates to better

brand visibility, and higher profits. Though this

project took some time to reach wide acceptance, it

is a part of the accepted routine now.

s Process Ownership: It is important for the

processes that cut across various functions to have

an identified process owner, who takes complete

ownership in defining business requirements in the

inter-organisational domain. Also active

involvement of all affected functions should be

ensured. The process owner plays an active role in

defining requirements and functions and also helps

in the resolution of issues in different stages of IOS

planning. In addition to helping define business

requirements and craft to-be processes, the processowner needs to proactively preempt problems and

play an active role in the resolution of issues. GCPL

identified dedicated process owners for all the

important processes of Sampark. Additionally, it

bore the entire cost for the Sampark initiative.

s Project Management: The critical success factors

(CSFs) for the success of the Sampark project have

been the participation from distributors and

continuous support of top management. After

implementation of the above projects, GCPL

realised that for integrating the stakeholders in

supply chain, the big-bang approach may not work.

A pilot and phased approach is more advisable since

the word-of-mouth spreads very quickly on the

success of the system and encourages others to adopt

it. The robustness of the system is very important

because the dependence of business on the system

is high. The major concerns for GCPL in the above

implementation have been control and security of

shared information between the partners and

meeting the cross-platform integration needs. The

concern for control and security of shared

information has been resolved to some extent by

setting authorisations for different data needs across

the partners.

BUSINESS IMPACT OF THE RE-DESIGNEDNETWORK

The initial calculations which were done showed that

the benefit would be at least 1% of the sales i.e. around

INR 60 millions (1.3 mn USD). On an overall basis,

inventory levels have come down by 50% and sales have

gone up. Payback period with these numbers came close

to year. To measure the benefits of the re-designed

network, distributors stocks were monitored. For

instance, the stocks of a distributor in Mumbai came

down from 30 days to 8 days. Also, the sales increased

from INR 1.6 million (0.04 mn USD) per month to INR

2.4 million (0.05 mn USD) per month. Some distributorshave reported about 15-20% increase in the number of

outlets covered which directly reflects on their top line

and in turn on the companys top line. There is a higher

visibility of material flow and data flow across the supply

chain. Figure 4 shows the inventory trends for the

distributors and retailers from October 2004 to

September 2006. The implementation of Sampark

software across 450 distributors and 32 CFAs completed

in April 2005. With the implementation of Sampark

software the inventory levels have decreased across the

Supply Chain.

Improvement in Quality of Service

Sampark has helped GCPL to considerably strengthen

the bond of the Company with the distributors by

significantly improving their quality of service to

distributors. Earlier, pressures on the sales force in

meeting primary sales targets led to unnecessary build

up of stocks at the distributors end leading to high

inventory carrying costs. High Margins products were

being pushed in preference to low margin products

ignoring market realities. This would invariably lead to

stock-out conditions for some products. Sampark by itsinherent business logic accurately captures the market

realities of the sale of GCPLs products and ensures a

steady stream of right dispatches from the CFAs tothe distributors. The distributor is no longer besieged

with unnecessary pile up of stocks and is able to controlhis stocks much more efficiently. The Stock Placement

Accuracy which measures the delivery efficiency has

gone up from 70% to +90%. Figure 5 shows the stock

out to sales ratio in the same time frame. It is seen that

overall, there has been a reduction of inventory holding

days by 60% and a reduction of Stock-out situations by

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92 qKaushik

60%. Some of the other benefits from the Sampark

initiative include:

Reduction in Lead TimesUsing Sampark, GCPL has reduced the lead-time taken

to replenish a distributor. The distributor stock is

replenished on a daily cycle compared to a weekly cycle

earlier. In the larger picture, lead times to respond to

market demands have also reduced. Since the carrying

and forwarding agents (CFA) are intimated about a

stagnation or scarcity in advance, precautionary

measures can be taken days earlier than when following

the traditional methods. Due to lower distribution

inventory, GCPL can respond faster to competition via

promotions, new product launches without the concern

about stock buy-back. The efficacy of any marketing

campaign/price scheme is now visible on an almost real

time basis.

Commercial and Financial Benefit

The traditional system of product-distribution followed

a 21-day inventory cycle, at the end of which, surplus

products were either recalled or strategically sold. This

practice led to stagnation: the distributor blocked his

capital, and had little incentive to roll off his stock. Using

Sampark, the distributor does and shares his billing andinventory documentation daily. This updates the carrying

and forwarding units, who then replenish only that stock

which is sold out, and in realistically saleable units. It

also helps to make for forecasting and alternative sales

strategies for those products facing low demand.

The distributor, on his part, streamlines his

investment strategies, banking his money in smaller units

for shorter periods of time, on assured sales. Thus, thereturns on his investments are higher, freeing up a little

extra money that can be, for instance, invested in niche

marketing strategies or hiring more on-field sales

executives. More sales representatives are able to cover

more area per day, upping their daily target andincreasing the sales. Some concentrate only on visibility-

improving tactics such as display, or covering niche areas

such as salons and other places which are more viable

for lifestyle products cosmetics and high-end grooming

products. There has been overall improvement in the

profits and improvement in customer support and

average response time to the distributors. The integrationand re-design of the business network has also benefited

the sales team and there is an almost 60% reduction in

the time spent on collection and compilation of data from

the distributors. This has increased the availability of

field working time for the sales team.

Benefits from Extending Sampark to Suppliers

(the Sahayog Initiative)

The integration of suppliers through Sahayog initiative

has yielded benefits such as improved order tracking,

reduction in dispatch lead time and quick settlementof outstanding. There have been two important benefits

Inventory at the Distributors

0

10 0

20 0

30 0

40 0

50 0

60 0

70 0

80 0

Oct_

04

Nov_

04

Dec_

04

Jan_

05

Feb_05

M ar_05

Apr_05

May_

05

Jun_

05

Jul_

05

Aug_

05

S ep_

05

O ct_

05

Nov _

05

Dec_

05

J an_

06

Feb _0 6

Mar_06

Apr_06

May_

06

Jun_06

J ul_

06

Aug_

06

Period

Retailing

Value

(Rs

mn)

0

5

10

15

20

25

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NumberofDaysofDist

ributorInventory

Distributor Stock

(Rs mn)

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(Rs mn)

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Figure 4: Inventory Trends October 2004-September 2006

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from Sahayog. One, it has significantly reduced the

number of follow-ups by suppliers (by at least 60-

70%). This is because most of the purchase related

information or the suppliers financial history is always

there on Sahayog for the suppliers to access. The

suppliers also record the dispatch related information

as soon as they dispatch the goods. This helps GCPL

to plan much more efficiently. This information

supplied by the suppliers is used in the inventory

planning process. GCPL has now moved from a

monthly planning cycle to a weekly planning bucket

because of Sahayog. The unplanned emergencies

caused due to lack of information on material

availability have also come down significantly.

Through the Sampoorna initiative, GCPL aims to

extend the replenishment to the last link in the supply

chain, thereby improving the efficiency. This provides

a more agile arrangement for the network to produce

from actual customer requirements as a starting point,

and not on the basis of assumed or forecasted customer

needs. This is expected to give benefits such as savingof up to 30% of time in order taking process at the retailer,

increase in accuracy level of billing information and

better reach of all the range of products.

CONCLUSION

This research uses a case study method to examine the

IOS between GCPL and its business partners. Business

organisations are increasingly getting networked with

their business partners and they need to incorporate the

network issues in their IOS planning process. IOS

planning requires addressing the problem of finding how

diverse systems and platforms will be integrated to meet

the organisational requirements. The conventional

methodologies fail to explicitly address such integration

issues. The case study findings focus on some of these

issues and identify how they impact the IOS planning.

Specifically, it focuses on the need for a separate IOS

planning for different value chain partners; analyses the

process re-design and change management issues and

emphasises the need for coordination amongst various

IOS initiatives and between the network partners and

business managers of the key actor.

The end to end integration as in the case of GCPLprovides a more agile arrangement to produce from the

actual customer requirements as a starting point, and not

on the basis of assumed or forecasted customer needs.

GCPL identified three basic elements to its IS planning

strategy in the business network: communication,

cooperation and integration. Communication became the

backbone for cooperation and integration. Based on this

understanding, GCPL identified integration withdistributors as a backbone initiative and then extended it

successfully to the suppliers and retailers. To start with

GCPL restricted the scope of IOS planning to select

processes and expanded the application coverage in futureas per the requirements. The channels to various value

chain partners were planned for separately. The decision

regarding sourcing of applications for an internal and inter-

organisational process need to be taken in the light of a

number of factors including the nature of application,

number of users, skill level available with the channel

partners and the cost of ownership etc. It was also observed

7 . 8 1 %

3 . 5 6 %

1 . 8 6 %

2 . 2 4 %

1 . 3 2 %

0 . 6 2 %

0 . 1 8 %

0 . 4 5 % 0 . 4 2 %0 . 3 5 %

4 . 1 5 %

3 . 8 6 %

2 . 3 3 %

1 . 8 0 %

2 . 3 4 %

1 . 7 3 %1 . 8 8 %1 . 9 4 %

0 . 5 7 %0 . 7 2 %

1 . 1 1 %

0 . 9 0 %1 . 0 8 %

0 . 0 0 %

1 . 0 0 %

2 . 0 0 %

3 . 0 0 %

4 . 0 0 %

5 . 0 0 %

6 . 0 0 %

7 . 0 0 %

8 . 0 0 %

O

ct-04

N

ov-04

D

ec-04

J

an-05

F

eb-05

M

ar-05

Apr-05

M

ay-05

J

un-05

Jul-05

A

ug-05

S

ep-05

O

ct-05

N

ov-05

D

ec-05

J

an-06

F

eb-06

M

ar-06

Apr-06

M

ay-06

J

un-06

Jul-06

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Figure 5: Stock out- Sales Ratio October 2004-September 2006

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94 qKaushik

that the companies find it difficult to support and integrate

different programmes for the channel partners such as

distributors, suppliers etc. Therefore, one major objective

of IOS plan was seen to be standardisation of application

and processes with the channel partners. GCPL used pilot

with phase in approach to IOS planning. The same may

be recommended for other actor-network based supply

chain networks.

Change management is a critical issue in planningIOS. Proactive change management requires companies

to address the right structure, policy, processes and

performance measures with all the entities affected by

change. The implementations are essentially phased so

that the new system is introduced gradually and the change

can be managed. GCPL has completed its integration with

the distributors and has realised significant benefits fromit. Only some of the benefits from integration with the

suppliers are documented as part of this case study as this

initiative has been completed recently. The programme

to integrate retailers is in the progress. This is a limitation

as comprehensive discussions and learnings from the

other two initiatives could not be included for the purpose

of this case study. The research confirms the benefits of

IOS already discussed in the literature such as increased

coordination, shorter sales, production turnabout time and

greater monitoring capability. It identifies CSF for

organisations which want to adopt IOS with their business

partners. These CSF include: shared vision, change

management, cross-organisational project team, inter-

organisational BPR, clear process owner for the IOS

processes and strong project management.

The limitation of this research is that though the

author has done a detailed study of IOS implementation,the insights may not be complete since it is single case

study based. Also, the study maybe more biased

towards the CPG sector and may have missed on some

of the more general planning issues and CSFs in IOS

domain. It is believed that with some more IOS studies,

the list of the factors can be modified. Also, differentcountries have different cultures and business practices.

It needs to be tested whether the CSFs and planning

issues in respect of a CPG company in India are

applicable to companies operating in other industries

and countries.

NOTES

1. I Express my thanks to the Chief Information Officer, Mr

Mani Mulki, other Senior Managers of GCPL; distributors

and suppliers of GCPL for sharing their insights for the

purpose of case study.

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