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Case study: SAP implementation at Wockhardt

Wockhardt had already deployed ERP systems from Avalon, but was plagued with a number of challenges but as it went more global, looked for integration across all business functions, faster information availability, and better control of operations. This case study describes how SAP implementation solved these problems QUICK FACTS Summary Name : Wockhardt Ltd Head Office : Mumbai, India Industry : Life Sciences Services: Healthcare - Pharmaceutical Products/Hospitals/Services Employees : 9,000 Revenue : INR 26 Billion (US$ 650 Million) Website : www.wockhardt.com Implementation Partner : IBM India

Challenges & Opportunities : Inability to manage rapid business growth due to limitations of existing technology and software applications. Difficulty in managing and controlling disparate data Legal and Management consolidation of distributed systems Integration of business processes and real-time management

Objectives

Establish a single, integrated Enterprise Resource Planning (ERP) solution Standardise business processes across the organization Provide a platform for free flow of information and a central data repository Improve visibility

Why SAP solution A robust, integrated solution Functions and Features Met companys requirements Positioned for future growth Global credibility SAP as a reliable partner Assured support Implementation Highlights

Time-frame : 8 months Top Managements support Highly dedicated team Highly successful implementation with a big bang approach in India Subsequent rollouts to subsidiaries in Europe and US by the Wockhardt In-house team Benefits Real-time access to higher quality information More structured data forming a basis for informed strategic and operational decisions A consolidated, single view of the business More efficient working practices, thanks to standardised, integrated business processes Ability to manage the growing complexity of purchasing processes Improved inventory management Better coordination of work across multiple locations Comprehensive business insight and analysis, Supporting faster decision-making and tighter control Support for significant business growth with seamless, quick and easy integration of newly acquired companies Enhanced ability to respond flexibly and rapidly to changing market and external conditions and translate strategy to action Increased employee satisfaction with simple and central access to information and applications

Existing Environment Non-integrated, non-SAP systems

Hardware: IBM P-Series Operating System: IBM AIX Database : Oracle 10g SAP Solutions and Services : SAP ERP, SAP NetWeaver, SAP NetWeaver Portal, SAP Business Information Ware house, SAP Solution Manager, a tool found in the SAP NetWeaver platform Wockhardt Ltd : SAP ERP Success Story ( in Detail) SAP takes care of growth at Wockhardt Ltd, a leading player in the global healthcare market. Background Wockhardt Limited is a global pharmaceutical and biotechnology company based in India, with a strong and growing presence in the worlds leading markets. The company, a leading player in the Healthcare Industry, manufactures and markets formulations, biopharmaceuticals, nutrition products, vaccines and active pharmaceutical ingredients (APIs). Wockhardt has manufacturing plants in India, United States of America, UK, Ireland, and France. More than 65 percent of the companys revenue comes from the United States of America and Europe. The Need for SAP Wockhardt had already deployed ERP systems from Avalon, but was plagued with a number of challenges. The company was unable to draw a future roadmap and upgrade its technology. Consolidation of data across locations was difficult. To add to that, duplication of work and reconciliation would happen at every stage. Further, the lack of a structured information system led to delayed decision making, and consequently was having a negative impact on the business. Transparency in processes was essential to make informed decisions. The company looked for integration across all business functions, faster information availability, and better control of operations. This prompted Wockhardt to look for an alternative enterprise applications solution for its business. Wockhardt goes global, moreover, Wockhardts strategies are aligned towards being a significant player in the emerging global biopharmaceuticals market. It has a strong track record in acquisition management, with five successful acquisitions in the European market. The company decided to replace its existing IT landscape with a future-oriented solution that would be capable of supporting growth and continuous innovation on a global scale. processes was a major reason for introducing SAP solutions. Looking ahead, Wockhardt determined that the SAP software could scale and adapt to support its continuously expanding global business. Making the right choice with SAP

With Wockhardt going global, the need of the hour was a robust IT infrastructure and an efficient information system in place. The company looked for an ERP solution that would: n Consolidate operations across multiple countries and multiple currencies. Cater to global business requirements, while handling country specific requirements Introduce best practices of Life Science Industry for all locations Offer a single technology platform and business data analysis capability Provide high level of security, role and authorisation control

The company short listed Oracle and SAP, but found that the SAP solutions were exactly in line with its requirements. Moreover, SAP ERP has worldwide acceptability with best practices. It offers a stable, scalable and proven technology platform, while providing good support for enhancements, says Suresh Shenoy, Senior Vice President IT, Wockhardt Limited. The company was impressed with the solutions enhanced features and future roadmap about new technology and product enhancements. Implementation IBM India was chosen as the implementation partner for the project since they had had the requisite experience in the Pharma domain. The implementation which was started in May 2005 took around eight months to be completed. The triedand- tested ASAP methodology was deployed to streamline tasks All said and done, it has been a satisfying implementation, says Shenoy. The critical success factors were a strong in-house team, management support, and of course, the right software. Today, there are satisfied SAP users in Wockhardt. The modules implemented include: Materials Management (MM) Production Planning (PP) Quality Management (QM) Plant Maintenance (PM) Sales & Distribution (SD) Customer Service (CS) Human Resources (HR) Financials & Controlling (FICO) Product Life Cycle Management (PLM)

The solution has been implemented at the companys sites in India, United States of America, United Kingdom, Ireland and Switzerland. Benefits Pre-implementation, Wockhardts business processes were not integrated and data lacked consistency and accuracy, which lead ineffective decision-making, lack of flexibility and inefficient use of resources. This resulted in higher incidence of data entry errors, higher costs of error processing and paperwork.

Efficiency Improvements The introduction of an integrated solution across the organisation has brought many benefits for Wockhardt. A single unified data platform and standardized business processes have eliminated data entry redundancy and saved valuable data in real-time, which enables them to execute their tasks more efficiently. While enhancing overall efficiency across the organisation, the centralized system ensures that information across the business is available to management, not just as raw data, but also as detailed reports. Reports can be quickly produced and without logistical headaches. Moreover, access to accurate information enables the company to evaluate options and make well-informed decisions, on a timely basis. Enhanced Visibility The most striking benefit has been complete visibility leading to better planning and improved coordination across the organisation. The company enjoys full visibility into stock across all its sites. The result is optimised inventory throughout the supply chain and improved replenishment planning, with better fill rates and fewer stock outs. A clear picture of the inventory leads to improved inventory management, while reducing dependency on the employees to provide the data as and when required. Further, the system takes care of the processing of purchase orders while reducing the scope for errors and eliminating data redundancies, leading to significant time savings. An up-to-date, centralised view of purchasing activities enables the company to make effective management decisions. With SAP, all business processes are integrated leading to centralized planning, procurement and payments. The companys sales depots are connected for transactions and reports, which gives them online visibility of sales and stocks, says Shenoy. Thanks to its new systems, Wockhardt has access to more accurate facts and figures in real time. Rich reporting and analysis functionality enables management to identify opportunities and risks that they may not have otherwise spotted; resulting in increased efficiency. With virtually every business unit utilizing the solution, information flow and corporate decision making. Effective Control for the Strategic Direction of Subsidiaries The companys centralised SAP softwarebased system gives management an effective tool for the direction and control of its country subsidiaries. SAP ERP supports Wockhardts growth rate and enables fast and smooth integration of newly acquired companies in Europe and United States of America. Further, the SAP Business Consolidation solutions take care of consolidation of different currencies as well as legal reporting requirements. More Advantages Shenoy lists out the measurable benefits which the company has experienced following the implementation of SAP solutions: Better LIFR (Line Item Fill Rate) Reduced Receivable days: reduced from 120- 150 days to less than 100 days Reduced Credit Returns: A centralized view enables the Company to take care of products which are near expiry dates leading to a reduction in the number of goods which were being returned.

Better Purchasing Rates

We have 8 manufacturing plants in India. Earlier, purchasing activities at each plant would not be done in coordination with other plants. Now, we can transfer excess material from one plant to another. SAP ERP has brought in better organisation and control of our entire business, says Shenoy. Further, the company is now in a position to negotiate with vendors and enjoys advantages of making bulk purchases. Integration of heterogeneous systems like EDI (Electronic Data Interchange), BlackBerry with SAP software: Through EDI, customer orders and invoices can be integrated. Orders are extracted from the BlackBerry server and generated in SAP, says Shenoy. Further, the company is now in a position to negotiate with vendors and enjoys advantages of making bulk purchases. New Capabilities Integration of heterogeneous systems like EDI (Electronic Data Interchange), BlackBerry with SAP software: Through EDI, customer orders and invoices can be integrated. Orders are extracted from the BlackBerry server and generated in SAP, says Shenoy. SAP NetWeaver Portal gives managers fast, user-friendly access to high-quality, consolidated information for tactical and strategic decision-making. It enables simple, secure and personalised access to information for employees and business partners. Consequently, communication among individual departments works better, while opening up new options for cross-site collaboration. Access to the Portal helps vendors to plan their anufacturing/production activities according to the companys requirements. SAP software enables the company to compete more effectively by giving it increased flexibility to respond quicker to market opportunities, provide value-added services to its customers, and change course when necessary. Moreover, SAP ERP has worldwide acceptability with best practices. It offers a stable, scalable and proven technology platform, while providing good support for enhancements, says Suresh Shenoy, Senior Vice President IT, Wockhardt Limited. Future Plans The company has established a set of standard operating procedures which has resulted in better control and overview of its business operations. SAP ERP enables Wockhardt to successfully cope with the challenges of the business environment it is operating in. SAP ERP has proved to be the ideal enterprise resource planning software for the company which operates globally across different locations. System that provides the flexibility we need to meet new challenges and opportunities on a global scale. Most importantly, the current landscape allows the company to expand without requiring significant upgrades or overhauls. We have a core business infrastructure that can grow as we grow,says Shenoy. Wockhardts future plans with SAP include: SAP Customer Relationship Management (SAP CRM) SAP Supplier Chain Management (SAP SCM) SAP Advanced Planning & Optimization component (APO) Payroll module SAP NetWeaver Exchange Infrastructure (SAP XI)

SAP NetWeaver component for integration.

Company Name : Wockhardt Limited Head Office : Mumbai, India Industry : Life Sciences Services : Healthcare Pharmaceutical Products/ Hospitals/Services Employees : 9,000 Revenue : INR 26 Billion (US$ 650 Million) Website: www.wockhardt.com Implementation Partner : IBM India Challenges & Opportunities Inability to manage rapid business growth due to limitations of existing technology and software applications. Difficulty in managing and controlling disparate data Legal and Management consolidation of distributed systems Integration of business processes and real-time management

Objectives Establish a single, integrated Enterprise Resource Planning ERP) solution Standardize business processes across the organisation Provide a platform for free flow of information and a central data repository Improve visibility

Why SAP solution A robust, integrated solution Functions and Features Met companys requirements Positioned for future growth Global credibility SAP as a reliable partner Assured support

SAP Solutions & Services SAP ERP, SAP NetWeaver, SAP NetWeaver Portal, SAP Business Information Ware house, SAP Solution Manager, a tool found in the SAP NetWeaver platform Implementation Highlights

Time-frame : 8 months Top Managements support Highly dedicated team Highly successful implementation with a big bang approach in India Subsequent rollouts to subsidiaries in Europe & US by the Wockhardt In-house team

Benefits Real-time access to higher quality information More structured data forming a basis for informed strategic and operational decisions A consolidated, single view of the business More efficient working practices, thanks to standardized, integrated business processes Ability to manage the growing complexity of purchasing processes Improved inventory management Better coordination of work across multiple locations Comprehensive business insight and analysis, supporting faster decision-making and tighter control Support for significant business growth with seamless, quick and easy integration of newly acquired companies Enhanced ability to respond flexibly and rapidly to changing market and external conditions and translate strategy to action Increased employee satisfaction with simple and central access to information and applications

Existing Environment Non-integrated, non-SAP systems Hardware: IBM P-Series Operating System: IBM AIX Database: Oracle 10g

Functionality: The R/3 System offers you a software solution that covers all commercial processes and transactions commonly occurring in a company or group of companies. Integration: All work processes within a company or group of companies are linked through data and functions using the R/3 System.

 User Friendliness: The R/3 System has a uniform graphical user interface for all application areas. Individual Solutions: System-controlled customizing procedures allow you to create solutions from a wide variety of prepared application variants to satisfy individual requirements. Flexible Structure: Whether in a departmental organization or on the warehouse or factory floor, change is the only facet of your business that will not vary. Adaptability must be universal, and the R/3 Systems flexible structure and extensive integration helps make that easier.

Enterprise-Wide Integration: SAPs enterprise-wide R/3 System solutions meet the needs of constantly changing, continually evolving businesses. The R/3 Systems application components are fully integrated. Transaction-related process chains trigger the next activity as needed from engineering to materials management, to production planning, to sales and distribution. The R/3 Systems full integration pulls your enterprise together, promoting data access, flexibility, and productivity. No other product or suite of products provides the R/3 Systems functional links between processes that multiply the power of each persons work. Real-Time Information: The R/3 Systems ability to drill down to whatever level of detail you need is legendary. More than any other product, the R/3 System provides up-to-theminute, real-time information wherever and whenever you need it. Mission-Critical Business Processes: SAP has more than 20 years of experience designing sophisticated application software for backbone and mission critical business processes. Nine of the top ten Fortune 500 companies use SAP software. SAP developed most of the R/3 Systems functionality in close cooperation with these customers. Consequently, it has integrated the best business practices of the worlds most successful companies into the R/3 System. The R/3 Systems business processes are flexible, pragmatic and well documented. Today they form a widely acknowledged standard for Business Process Reengineering (BPR). Best of Breed: Users want standard software as well as standard business processes and guidance on how to implement them successfully. With the R/3 System you get the best of breed for all common business processes. You do not need to compromise on flexibility. If you need or want to fine tune or tailor your R/3 System, the capability is there.

 Enterprise-wide three-tiered architecture: The R/3 System remains the only enterprisewide, three-tiered architecture. The R/3 Systems three-tiered client/server architecture separates the system into areas devoted to database, application functionality, and desktop presentation. This structure promotes maximum flexibility, freedom of application component choice and the ability to change and add to the system as your organization grows. The development of the Internet, including the World-Wide Web, promises to make dramatic changes in communications between businesses and customers. SAP is working with several partners to develop enhanced Internet extensions for the R/3 System. For additional information, see SAPs Web pages at: http://www.ext.sap.com Concurrent engineering: Concurrent engineering cuts time-to-market by stacking up business processes whenever functions can take place concurrently rather than consecutively. The R/3 Systems flexibility and integration help you form the real-time workflow application links required for concurrent engineering. Lean Implementation: The R/3 System promotes lean implementation through its modular structure. By selecting key portions of the R/3 System for first-time implementation, and minimizing customization, new users bring the full power of the R/3 System to address their business issues with great speed, at a reasonable cost. Once running, the R/3 System makes it easy to add more functional pieces. Tools on various system levels allow you to fine tune all R/3 System functional modules. Gradually adding functionality makes core solutions available sooner without sacrificing long-term application muscle. Desktop Integration: Desktop integration in the R/3 System means that whenever you want data moved into a desktop PC application, it is a mouse-click away. Download or export a file to your PCs hard drive and then open it in your favorite spreadsheet or word processor. No awkward or failure-prone communications between hardware or to hinder hinders your productivity Online Integrated Graphics: Online integrated graphics in the R/3 System save you time and effort, while making your information more meaningful. From most locations in the R/3 System, you can instantly create full-color 2-D or 3-D graphics from your data. If you change any data, you can instantly see it affect the graphics you have selected. You can also use your mouse to change graphics manually.