Dubey Helps Mawana Streamline Inventory and Save Time

Summary:

Every hour that Mawana Sugar couldn’t get raw sugarcane to its factory  hurt its bottom line heavily. But with 450 collection centers spread out over remote parts of western UP,  the problem seemed insurmountable.

Highlights:

Mawana Sugar expects to save about Rs 8 lakh a year in lower manpower costs.Before the implementation Mawana employed 27 data entry clerks during the six-month season, today it has only three.

Reader ROI:

Boosting bottom line growthEmpower production teams saving Rs 13 lakh more a year

What’s common between the delicate mayfly and Mawana Sugar, India’s sixth largest sugar manufacturer? They both thrive in 24-hour cycles.

We empowered the production teams, earning the company Rs 13 lakh more a year.

Here’s the very bitter truth behind sugar: It takes only 24 hours for a stalk of sugarcane to lose 75 percent of its sugar content after it’s been harvested. If you’re a sugar manufacturer, you have less than 24 hours to get sugarcane from the field and into your factory, before your investment loses three-fourth of its value. Few industries pay such a heavy price for a lack of inventory control.It’s tough being in the sugar business. Especially if you don’t have the IT muscle to walk that fine balance between too much and too little inventory.Mawana Sugars had faced both realities and was set on changing the way it worked. And Subodh Dubey, group CIO, USHA International and Mawana Sugar, was the man they were depending on to get the job done.Information Molasses  The fertile plains of western Uttar Pradesh are home to the largest sugarcane farms in India and India’s the second largest producer in the world. From the air, the never-ending sugar plantations are a sight that’s hard to forget. But that pretty picture hides a grim reality. In a recent interview, Ajay S. Shriram, chairman of the Sugar Committee of the CII, said that none of India’s 650-odd sugar mills were making money, because the price that the government demanded sugar to be sold at was lower than production cost. Mawana Sugar was one of those companies.  According to its latest financial records covering the last 18 months leading to March 2011, the company booked losses of Rs 58 crore after taxes. One of the ways Mawana could improve its bottom line was to make production more efficient by getting more control of its raw materials supply chain. Mawana Sugar sources its sugarcane straight from sugarcane farmers through hundreds of collection centers dotting western UP’s landscape. From here, the cane is forwarded to one of three factories in Mawana, Titawi and Nanglamal for processing.  The problem was that there was no real-time information about how much sugarcane each collection center had gathered. This made it impossible for production executives at the three factories to plan their production as optimally as Mawana’s top brass wanted. A typical day at a Mawana collection center starts with farmers bringing in their produce, having it weighed and checked for quality. The sugarcane clerk, as the company calls them, then makes three copies of that report, one for the farmer, one for Mawana and the last one for cooperative societies. (Each farmer belongs to government-formed cooperative society which determines how much—and at what price—each farmer can sell to a sugar mill or jaggery and khandsari producers. Each society maintains a database of its farmers with details including their expected crop.)At the end of every day, sugarcane clerks have to visit the closest Mawana Sugar factory and enter their report into Mawana’s systems with the help of a data entry clerk. This was then verified by a cane procurement officer on Mawana’s payroll to check for mistakes or fake entries. It was only then that a factory’s production team could get their hands on the data and create their production plan. “There were up to 16-hour delays from the time sugarcane was procured to the point data became available. Multiple stakeholders made the entire process tedious, long-winding and prone to human error,” recalls Dubey.  To work around this problem, production executives relied on experience. “Without real-time information of how much of inventory could be expected by the end of the day, production managers would have to rely on gut to create a production plan,” says Dubey. And when their estimates were off, their back up plan was to re-calibrate equipment in the factory to accommodate the extra cane. But that process could take from a couple of hours to a day, says Dubey.That’s time that Mawana Sugar couldn’t spare. Every hour of delay only lowered the amount of sugar it could extract from its cane, which hurt the business dearly. It also brought work to halt. That was hard to swallow given that most sugar production takes place for only six months a year, from October to March when sugar cane is harvested and mills worked over time just to keep up. If the company suffered from a glut of sugarcane during the harvesting season, it also had to endure challenges stemming from too little inventory during the off-season, or at the beginning of the harvest season when the flow of sugarcane was irregular. When sugarcane supply sputtered, there were times Mawana’s machines ran on empty, crushing air, costing the company money. Dubey needed to come up with a solution fast. Time wasn’t on their side.Sweet on Mobility  Dubey had a bunch of solutions to chose from to deal with the problem. But not all of them would work with the constraints of the business. “We could not think of computers as some of the collection centers are located in remote villages which don’t have a steady supply of electricity,” he says. It didn’t take Dubey long to figure out that his best bet lay with some sort of mobile device, but the question was: Which? “The device needed to be rugged enough to endure tough treatment and the application simple enough not to scare away the sugarcane clerks, most of whom are not very educated,” says Dubey. “Also, a printer was essential because the farmers needed to be given a receipt and we needed a copy of the receipt to be handed over to the societies,” he says.Dubey considered the option of mobile handsets with printer attached via a Bluetooth. But the lack of electricity made him look for better alternatives. By mid-2010 Dubey decided to call on Hyderabad-based, telecom equipment and software solutions providers Visiontek to provide handhelds. Their handhelds were equipped with a keypad, a five-line screen, an in-built Dot-matrix printer and could connect to the Mawana central server located in the cloud through GPRS. “The handheld sends and receives data using GPRS, and the middleware application and DB server is hosted on cloud using IaaS, which increases efficiency,” he says.Dubey also made sure he chose an impact printer over a thermal one because the writing on the receipts needed to stay for long time, both for record keeping and in case a farmer wanted to encash his sale receipt later. “The thermal prints wear out pretty fast,” he says.In the meanwhile, Dubey’s team got busy creating a master database with all the details of all the farmers the company worked with. And he made sure that he included every detail that a sugarcane clerk needed to know about the farmer. “Today, when a sugarcane clerk connects to the system every morning, the handheld downloads the master database,” explains Dubey. This ensures that when a farmer visits the collection center, the sugarcane clerk only has to enter his name or identification number—and the system auto-fills all the other fields from the master database. Once a clerk weighed the sugarcane and entered the data into the handheld, it is updated to Mawana Sugar’s backend systems in real time. And the in-built impact printer prints two receipts automatically.“The cane procurement application has been integrated with the ERP and all major business critical applications to ensure that departments like production planning, finance, and logistics don’t have to wait till the end of the day for updates,” says Dubey.Thanks to the new system, Mawana Sugar expects to save about Rs 8 lakh a year in lower manpower costs. Before the implementation Mawana employed 27 data entry clerks during the six-month season, today it has only three. “We have retained three data entry clerks at each plant location who input data coming from the societies or details of new farmers into the master database,” says Dubey.Timely dispatch and better planning has resulted in reducing the time it takes  from collection center to processing by two to three hours, resulting in that much more sugar recovery. “The approximate increase in sugar recovery from the cane stalks can increase by 0.005 percent,” says Dubey.If you think that’s small, think again. Mawana buys a total of about 10 lakh tons of sugar cane and 0.005 percent makes the company an additional Rs 13.6 lakh a year.Course Correction For other CIOs attempting something similar, it’s important to note that Dubey faced some unexpected problems. Most of the them stem from a lack of proper infrastructure in rural India. Take for example, how during the pilot, Dubey noticed that mobile signal strength fell in some pockets or were simply unavailable in some parts. It was a problem that could have sent Dubey back to the drawing board, since it seemed that it wasn’t a problem within their control. Dubey says that instead of starting again, he decided to work with an ISP. Along with his team, Dubey surveyed all the areas where collection centers were located and created a map that showed where signals were weak or unavailable. “The ISP added extra boosters to strengthen signals and even set up a few towers at places with no signal availability,” says Dubey.Another concern gnawing most CIOs who experiment with handheld devices is the maintenance and upkeep of devices. The devices chosen by Dubey, for instance, needed modifications even though he had closely scrutinized its choice. The problem he says is that the device came with a small antenna that project from the device. “A few devices suffered damage during the pilot as the antennas could break easily,” he says.Dubey fixed this problem by working with Visiontek to ensure that the antenna was built into the device and then enclosing the handheld in a hard leather case with a tiny hole.  Sugar High Another area of the business that could do with more real-time information was its logistics. Mawana Sugar has 450 collection centers in Western UP that are situated at a maximum of 200 kilometers from the nearest factory. These collection centers are serviced by 300 collection trucks and ensuring they were being used optimally was a daunting and manual task.“If [logistics executives] waited for complete load information (at the end of the day under the previous regime) from each collection center before they planned truck movement, we would lose precious time. Alternatively, they could send the trucks from center to center, but there was no way of knowing which collection center had how much load in store,” says Dubey.Today, when a truck leaves a collection center, sugarcane clerks enter either the driver’s name or the truck number into their handhelds and how much truck is carrying. With that real-time information, Mawana’s logistics team can better organize its truck movement—and the production team gets a head up on how much cane is coming their way.Then Dubey’s team did one better. “We have ensured that the logistics department can now also foretell which truck will arrive at what time” he says.Dubey can do this because the master database he and his team created includes the distance between each collection center and the closest factory—allowing them to forecast when a load of sugarcane was likely to arrive at the factory.“If a truck that has left a collection center does not reach within an hour and 15 after it’s scheduled arrival time, the system sends an SMS alert to a designated person from logistics,” Dubey says. “With the new SMS alert system, truck drivers cannot break away from their route for unapproved breaks. It was extremely critical that we ensured that the sugarcane reaches the factories as soon as possible,” says Dubey.The average utilization of available vehicles from collection centers to a factory was about 1.5 trips a day. With 300 vehicles available at every location, even a modest increase in average utilization to 1.6 trips a day, works out to 30 more trips.That’s the sort of benefits that’s going to drive bottom line growth. And sweeten the sugar industry.

We empowered the production teams, earning the company Rs 13 lakh more a year.