Goa Shipyard: Full Steam Ahead
Goa Shipyard Limited (GSL), a public sector unit in the business of shipbuilding, was facing rough weather that had nothing to do with turbulence on the high seas. While GSL had the requisite IT infrastructure in place, its IT systems existed as islands with no bridges to connect, exchange and analyze data. Its home-grown systems supported business processes such as procurement, finance, stores and payroll; as these systems were not integrated, project analysis was extremely difficult.
Shipbuilding is a competitive industry. It's not just Indian players; international shipyards compete for the same business. GSL's prime customer, the Indian Navy, was increasingly awarding contracts via a competitive bidding process. This put GSL in a situation where it faced competition from other shipyards both in India and abroad. GSL therefore came to the conclusion that it was time to overhaul its systems. Senior management opined that an integrated ERP system was going to be critical if the shipyard wanted to speed up its decision-making process. It soon decided to go in for an ERP solution from SSA Global with Godrej Infotech as the implementation partner.
The primary objective of the project was simple-avoid the duplication of entries across different applications and thereby trim the time taken for processing work orders, payments and invoices. In the long term, the shipyard hoped to reduce inventory and operational costs while speeding up the process of shipbuilding. Besides being given the mandate for implementing the Baan ERP suite, Godrej was also responsible for creating interfaces between the suite and legacy applications. The complete suite was licensed for 65 concurrent users. Subsequently, the company created over 40 interfaces for integrating the ERP system with its intranet, workflow and groupware applications.
The actual implementation involved a structured planning and monitoring methodology wherein each activity in the project plan was broken down to smaller sub-activities and assigned specific resources. Each task had a clearly defined deliverable and schedule attached to it. Plans were periodically reviewed to ensure that the project was progressing as planned. In case there were any deviations, contingency plans were made to ensure that the project was brought back on track.
A crucial factor that can make or break any ERP implementation is change management. Organizations have to ensure that employees are comfortable with the new system. To help employees get used to the system, GSL decided to take a step-by-step approach.
Traditionally, most organizations go live with an ERP project on a single date. On that date, all concerned parties switch over to the new processes. This ensures an immediate transition to the new way of working. However, it also means that all the changes happen simultaneously. GSL adopted a different approach called 'Extended Go Live,' whereby only the finance and related areas such as accounts payable, accounts receivable and stores inventory were taken live at one go. The shipyard's remaining processes such as manufacturing, quality, servicing, plant maintenance and payroll went live over an extended period of time. This resulted in a smoother handover to end-users. The entire project was implemented over nine months with the active involvement of a 15-member team from GSL.
Godrej also built a set of custom applications for GSL. The system integrator created over a dozen applications on the intranet that were fully-integrated with the Baan system. Over and above this, more than 15 workflow applications were created. To take one example, Godrej built a tendering workflow automation application which, among other things, publishes tenders and accepts bids over the Internet. This application is integrated with the ERP system. Some groupware applications including capital budget approval, civil works approval, board papers and MOU reports were also created.
Three primary interfaces were designed and developed between Baan and the legacy applications-between Baan and Tribon (a popular ship-building CAD software), Baan and Primavera (a planning and scheduling software) and Baan and CARS (computerized attendance recording system).
For a shipyard, the time taken to complete a project is crucial. GSL says it has experienced nearly 20 percent reduction in the time to build a ship. After implementing the ERP system, GSL has built two patrol vessels for the Coast Guard, and it completed the project nearly six months faster than it would have had it not implemented the system. ERP has also aided GSL in building six more vessels in the same category for the same client at a correspondingly enhanced pace.
"The ERP suite has enabled day-to-day transaction processing across the enterprise. This has helped reduce operational costs by nearly 10 percent. In a year's time we believe that this percentage will increase," says Anand Golwarkar, GSL's General Manager of Finance.
Additionally, there are several improvements that have contributed to the overall decrease in ship-building time and operational costs. Raw material purchase, which was a manual process, has now been automated through Web-based systems. Now the entire process of submitting tenders, approving them and reviewing bids can be done on the Internet. The accepted order is confirmed over the Internet, thus resulting in a shorter cycle. The raw material purchased by GSL is financed by banks. Hence the time taken to convert the raw material into finished goods has a substantial impact on profit margins; the shorter the time, the fatter the margins. With a 20 percent reduction in ship-building time, GSL has consequently raised its margins. Custom-built interfaces have eliminated the islands of information that once existed. Almost every application that existed as a satellite system is now integrated. Paperless transactions have reduced internal approval process time by 50 percent. Due to the web browser interface, customers can check the progress of their project on the Internet.
Having put the base system in place-at a total cost of Rs 3 crore-the shipyard now intends to implement business intelligence tools to get more out of its data.
The benefits of ERP at Goa Shipyard
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