SBLC4001 - Dabur's ERP Journey: Managing Information & Technology

This report provides an in-depth analysis of Dabur's journey in implementing various IT technologies, focusing primarily on Enterprise Resource Planning (ERP) systems, to gain a competitive advantage in the Fast Moving Consumer Goods (FMCG) sector. It begins by profiling Dabur and its initial adoption of BAAN ERP in 1999, followed by MFG/PRO ERP to automate outward logistics. The report highlights the challenges faced with these systems, including data inconsistencies and high maintenance costs, leading to the adoption of SAP ERP and SAP APO. The analysis section discusses the inefficiencies of previous systems and the significant improvements achieved with SAP, such as increased sales, reduced operational costs, and improved forecasting accuracy. The report concludes with recommendations for further integrating SAP with stockists, suppliers, and implementing new POS systems to optimize Dabur's business operations and enhance customer satisfaction, emphasizing the importance of a long-term IT strategy for sustained growth and efficiency.

Running head: MANAGING INFORMATION AND TECHNOLOGY
MANAGING INFORMATION AND TECHNOLOGY
Name of the University
Name of the student
Author Note

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Table of Contents
Introduction................................................................................................................................2
Company’s profile in the industry..............................................................................................2
Role of information system and technology in the competitive business environment.............3
Analysis section.........................................................................................................................5
Recommendations......................................................................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................9

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Introduction
Enterprise Resource Planning is used as a data system to integrate and manage certain
business areas like human resources, financials, distribution and manufacturing. For example,
if an ERP system is implemented in a company it will help the data to flow automatically to
other areas of the company and automatically update the receivable accounts. The order can
also be transferred to the manufacturing operations and help to reduce the inventory levels of
the warehouse.
In the following assignment, an assessment of IT technologies have been proposed.
The main motive of the report is to provide insight into the incorporation of IT technology in
the business structure of a particular company to gain competitive advantage in the current
business environment. The company that has been chosen here is Dabur, which is a renowned
company that sells its products globally, including UK. The chosen IT technology here is
taken as ERP or Enterprise Resource Planning technology.
Company’s profile in the industry
Dabur was first established in 1884 with the main motive of providing consumers
with affordable natural health and beauty products. It is one of the first natural products and
Ayurveda Company in the world and has over 1000 products in its global portfolio consisting
of health care, oral, skin and hair products. It has a turnover of around 4.3 million GBP and
has over 16.14 million GBP as market capitalisation (Dabur International Limited, 2018).
Dabur has strived to provide new services and products to the modern generation
while keeping maintain cordial relationship with its older loyal customer base.
The Network of Dabur is shaped in a star topology form with six Demand Assigned
Multiple Access (DAMA) links. The links consist of nearly 45 TDMA or Time Division
Multiple Access VSATs or Very Small Aperture Terminals that will be used from HECL or

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Hughes Escorts Communications Limited for linking the distribution network. A VPN or
Virtual Private Network Connectivity links the main offices of Dabur to various places
including the corporate office. By checking the feasibility and location of different aspects,
these networks have been chosen by Dabur (Dabur International 2018). For its main
connectivity, Dabur uses IDSN connectivity. But for holding its data communication
network, the company surprisingly does not have dedicated leased lines.
Role of information system and technology in the competitive business environment
For automating its business manufacturing process, in 1999 Dabur implemented the
BAAN ERP system. This was the first time that the company invested in an ERP technology
and used it in two major plants. Alpha Unix Servers were used as the main servers at the
commercial offices where BAAN was implemented. With the help of fibres and PAMA
VSATs, this technology allowed more than 200 users to login in the main plant in different
departments. The key modules of the BAAN ERP system are costing, dealer planning,
intelligent resource planning, master production planning, manufacturing and finance
(Singhla 2014). These modules were effectively used to keep track of the materials in
synchronization as it moves from the inventory (Chang et al. 2014). The new system helped
to device a planning process for the distribution plan such as RPP or Rolling Production Plan
for one month and based on the RSF or Rolling Sales Forecast, the RPP was increased to two
months.
In 2001, Dabur started the automation of its outward logistic system by implementing
the MFG/PRO ERP system. The implementation was done with the help of its primary
circulation system and involved major warehouses and over 12 CFAs or Carrying and
Forwarding Agents (Garg and Burmi 2014). The new system was deployed in four stages. At
first, a requirement analysis was conducted to understand the strategic business units that

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needed different outbound logistics. The business units consisted of Ayurvedic products,
perishable products, food and healthcare products and pharmaceutical products. The new
system helped to design a new business model which interconnected various segments (such
as finance, planning, sales and distribution and IT) at the same time. The new system helped
to improve dispatch of sales to the CFAs (Ram, Wu and Tagg 2014). Before this
implementation, most of the sales was conducted at the month ending which resulted in
various issues such as sales returns and cheque bouncing.
The new IT system also helped to improve the collection process. The collection
process made an improvement of about 6 days after the implementation and helped the
process to be spread over a month which helped to save a lot of money on working capital in
out bound logistics (Seo 2013). Other noticeable improvements were the proper management
of sales schemes and reduction in sales inventory which remained unsold.
In 2006, Dabur moved from standalone ERP Systems (MFG and BAAN) to a more
centralized ERP system The Company implemented a countrywide WAN network for
running the new SAP ERP system and made a new data centre (Nwankpa 2015). For
collecting real time data information regarding Secondary Sales the company invested in
distributors. The new system helped Dabur to improve its supply chain management with the
help of Accenture and helped them to reach their maximum distribution capabilities.
Currently, Dabur uses the SAP APO system to manage its automatic forecasting
capabilities. Dabur was already using the SAP ERP system but decided to try their new
offering, SAP –APO or Advanced Planner and Optimizer. The new IT technology helped to
break down the ATL/BTL input data and baseline sales in a chronological manner (Haddara
2014). At first, a diagnosis was conducted and the supply chain designing started. Next, the
APO modules were implemented and the technology was initiated. The new system helped

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Dabur to check their sales volume plan by putting in the growth target, Moreover, it helped
them to carry out calculations in real time such as capacity planning.
Analysis section
For handling its logistics, Dabur used the Fox Pro Based Systems for several years.
With the growth of the network, the distribution network of the company faced a lot of
pressure to implement a technological development. Fox Pro Based systems are not relational
database. In other words, the departments such as finance and sales had different databases
for their particular departments (Dabur.co.uk 2018). As a result the company faced a lot of
difficulties due to data inconsistencies. For the company to become competitive in the
business environment, Dabur had to integrate all its fragmented databases. This is why the
company finally decided to implement an ERP system.
The BAAN ERP system was very inefficient for Dabur as most of its raw materials
came from various unorganised sectors. Moreover, the technology was not easily
customisable for following the regulations of FDA for Pharmaceutical products. Also, the
BAAN ERP system had a centralized server that caused many issues for Dabur. The sales
crested at the last week of every month for the company. As the system used a centralized
server along with VSATs, the network became extremely congested during every month
ending (Nwankpa and Roumani 2014). The company needed a network dependant
architecture which it found in MFG/PRO ERP system.
Due to consistent problems of inconsistencies and data redundancies, Dabur felt the
need to maintain two separate ERP system in 2005. The MFG/PRO ERP system had a very
high maintenance cost (Hejazi, Halpin and Biggs 2014). The company realized that it needed
a decision support infrastructure which was not provided by the current system along with
operational excellence. Also, Dabur was in dire need of a centralized infrastructure which

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was not provided by MFG/PRO ERP. Moreover, after implementing the new system, Dabur
did not get the proposed profit margins that would be generated with the Technology
implementation. The company migrated to SAP core modules with the help of Accenture.
The integration of the SAP ERP system helped to develop a new distribution strategy
for Dabur for the company. The customer segments were identified and four trade channels
were created to reorganize the sales team. The sales of Dabur increased by 17% and the
profits increased by 41%. For surviving in the competitive business environment, the SAP
ERP technology cut down the operational costs and increased operational effectiveness
(Shen, Chen and Wang 2016). Lost sales decreased by 40%. Inefficiencies in forecasting
reduced by 52%. On time deliveries increased by 7% and adhering to the rolling production
plan increased by 72%.
With the integration of SAP- APO System, the lost sales of 6% came down to
3.7%.The forecasting error also reduced down to 40% from 85%. The accuracy of correct
forecasts increased over 60% from 25% (Matende and Ogao, 2013). All of this figures were
achieved in less than six months after implementation which proved how effective the system
was. The effectiveness of the logistics and distribution networks is expected to increase in the
near future. The health division of consumers were assessed with this technology which
showed an increase of 12.5%.
Recommendations
Although it took some time, Dabur has managed to gain competitive advantage with
the integration of proper IT technology. The company has still a long way to go before it can
truly gain optimum business operations.
First of all, Dabur needs to find a way to forward integrate with stockists and
distributors using SAP. This is critical as the preconfigured whole sale distribution content

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will enable Dabur to run its business processes with reduced risk, cost and effort. The
distributors will be able to enjoy the capabilities of the technology allowing them to develop
their ability to make proper business decisions, increase their efficiency and improve
visibility (Kilic, Zaim and Delen 2015). Moreover, the integration will help Dabur to address
customer grievances efficiently and allow them to focus on customer satisfaction more.
Secondly, Dabur needs to make a long term strategy and vision for its wholesale
distribution. This strategy will enable Dabur to make feasible decisions which was not
possible in the past with other distributors.
Third, Dabur needs to enable backward integration with suppliers. The advanced
forecasting analytics provided by SAP APO will allow Dabur and its suppliers to make wise
decisions to keep its inventory costs low.
Fourth, Dabur needs to implement a new POS or Point of Sale system at the point of
stockists and integrate them with the SAP APO ERP system. This will allow Dabur to engage
more customers, tally sales and manage inventories efficiently (Jeng and Dunk 2013).
Fifth, Dabur needs to implement the payroll system and SAP HR. This will be
beneficial for the company as it will help Dabur to make sound strategic decisions, lower
costs and improve business productivity. It will also allow Dabur to make the process of
recruitment easier and increase employee engagement.
Lastly, the company needs to incorporate the advantages of SAP APO ERP system in
all its businesses.
Conclusion
To conclude the report, it can be stated that Dabur has retained the position as a global
leader in the FMCG or Fast moving consumer goods section. The decision of Dabur to
eradicate BAAN as well as MFG ERP was seen as a highly efficient move and enabled the

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company to improve its sales structure and sales forecasting with the help of SAP APO. Also,
the decision to make the system available from the top management level to the bottom level
of the hierarchy also proved to be a major success.
In the assignment, several IT technologies have been discussed that Dabur has
undertaken to gain competitive advantage. The company felt the pressure to incorporate an
ERP system in its business model as it was facing some internal issues within the company.
According to the analysis section in the above sections, the implementation of IT
helped Dabur to make some effective strategic decisions increasing its overall productivity
allowed it to gain competitive advantage in the business scenario.
The role of technology and information system within Dabur to combat the
competitive business environment proved to be highly innovative and allowed the company
to distinguish itself from the rest of the companies present in the FMCG sector.

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References
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