Information Systems
at Hero Motorcycles
Final Project Report
Submitter by
Group 4 (Section D)
PGP/17/192 AJMERA CHAND KISHOR
PGP/17/203 CHUBASENLA JAMIR
PGP/17/214 KIRAN KANNAN P
PGP/17/224 PAMAL PREET SINGH
PGP/17/234 S VAISHNAVI
PGP/17/244 SUHANI POPLI
Submitted to
Prof Anindita Paul
Assistant Professor
IT & Systems
Table of contents
Introduction 1
Scope of the project 1
Initial observation 1
Impact of Information systems in Hero Cycles
Supply Chain Management 1
Enterprise resource planning 5
Customer Relationship Management 7
Strategic evolution 9
Decision making 11
IS governance 12
Conclusion 14
References 14
Member wise contribution 15
Information Systems at Hero Cycles
Hero cycles, the flagship company of O. P. Munjal Group Of Companies, is the world?s largest
manufacturer of bicycles with record annual sales volume of 5.6 million cycles in 2011. Hero
cycles is headquartered in Ludhiana, Punjab and was founded in 1956. The hero plant is rolling
out one bicycle every 9 seconds and is named by the Guinness book of world records as the
world?s largest producer of bicycles. The well-known two wheeler brand Hero MotorCorp is
also a subsidiary of Hero Cycles.
A worldwide company, Hero Cycles makes an effort to maintain synergy between its employees
and customers, which is enabled by the well-established Information system network possessed
by the group. Hero uses SAP to integrate all its departments through one thread, relying less on
paperwork and making information readily available to all parts of the organization. The
company's success can also be credited to the management's vision to align information
technology with business. It views IT as a strategic tool, which can help organisations in
achieving their goals and objectives. Says SR Bala Subramaniam,VP, Technology.
In this project, we have analysed the effectiveness of Hero?s Information systems and
technology in different domains of decision making, customer relationship management, and
supply chain management, among others in the 250 workstations owned by the group.
SCOPE OF THE PROJECT
ERP in Hero Cycles helps to integrate various functions thereby helping the company
achieve its organizational goals. Hero Cycles also use various SAP Modules such as Assets
Management, Project Systems and Workflow etc. Through this report we intend to study
how they manage and supervise individual aspects of asset purchase and sales, support the
planning, control and monitoring of long-term, highly complex projects with defined goals,
how they plan their plant maintenance for servicing and rebuilding equipment. The main
focus is on the procurement and inventory functions occurring in day-to-day business
operations such as purchasing, inventory management, and reorder point processing. Also
the SAP modules such as Quality Management and Production Planning which are used
for quality planning, inspection, and control for manufacturing and procurement and for
planning and controlling manufacturing activities are to be used. ERP has helped in
reducing the lead time by 60%, increased timeliness of shipments to 99%, increased
inventory turns to over 30% and reduced the manufacturing time of a single bicycle to
80%.
INITIAL OBSERVATION:
Hero Cycles has extensively benefited from the use of ERP by ensuring better quality of
bicycles and a manufacturing time of bicycle reduced to 80% of the initial time. It has
improved workflow and efficiency and given a better control over its resources.
EFFECTIVENESS OF INFORMATION SYSTEMS IN SUPPLY CHAIN
MANAGEMENT
Prior to the implementation of IS in Hero cycles and motocorp, the company used to receive
orders in the form of spreadsheets, emails and phone calls from their dealers. The process was
not streamlined and took a few days to weeks to pool the dealer?s data and consolidate them.
This also led to incorrect and inconsistent data from the supplier and vendor end. Hero cycles
and motocorp thus decided to implement an in-house IS that works on various platforms. This
enabled them to tailor-made the system to their requirements and style of work.
The dealer portal was a web-based business partner site to communicate and collaborate with the
dealers and vendors across its network. The portal enabled to exchange sales and order
information but there were inconsistencies in the sales and service processes followed by the
dealers.
Also the legacy IS took care of only the data processing part, leaving the real MIS data in
spreadsheets leading to fragmented and unstructured data. Sooner Hero realized the need for a
centralized system. This would enable the organization to achieve integration across systems,
improve business processes and cover the totality of supply chain from inventory forecasting to
delivery and after sales and better business decision making.
Value drivers
The Company?s Supply Chain Management function is built on three planks -Cost, Quality and
sustainability. Tracking inventory cost effectively and efficiently is therefore a key competitive
advantage.
The objective of the centralized IS is to enhance operational efficiency at the organisation and
dealer level and standardize customer experience. Other driving factors were:
? Improve information exchange with suppliers and vendors
? Enable suppliers and dealers to transact online using standardized and seamless process
? To accelerate the order processing system
? Better forecast inventory and improve JIT to maintain supply in line with the demand
? Single point of information for better decision making
Hero group always had a strong focus on supply chain integration, process efficiency and
accurate as well as prompt decision- making. Hero group evaluated several vendors, including
SAP, BaaN and Oracle. Extensive study has been made by hero cycles on each of the candidate
solutions. Huge presence in the automotive sector, feedback from reference customers, a
solution closer to their requirements and proven expertise in engineering made SAP as the
choice of technology. The implementation began in June 2000 and completed in Feb, 2001. The
flexible solution enabled the group to better respond to customer changes, cut time to delivery,
and eliminate waste.
More on mySAP
mySAP Supplier Relationship Management (mySAP SRM) automates processes between
sourcing and procurement, within the enterprise, and across the supply base. Thanks to the open
architecture of SAP NetWeaver platform, mySAP enables increased supply chain visibility and a
closed-loop insight of their global spend. This armed Hero to have an end to end control in the
supply cycle - from strategy to execution, enabled them to optimize supplier selection, compress
cycle times, and helped in building sustainable, workable supplier relationships. The
consolidated content and master data of mySAP SRM helped Hero group make quick and
efficient decisions that align with corporate strategy.
Business outcome
The software gave a competitive advantage to Hero group by enabling the suppliers and dealer
to perform online transactions. mySAP helped improving quality, access and usage of
transactional data and eliminated redundant entries. The software also eliminated manual
reconciliation and improved operational efficiency at various stages. Standardized order
processing, real time information on product cost, profitability, production and delivery status,
single point of data enabled vast dealer and vendor network to get correct and accurate
information on the status of orders, leading to improved relations.
Value realization
By the end of the year 2012, the system was successfully deployed at 645 dealerships across the
country. The system helped Hero group in various ways -
? Reduced supply chain order processing by 3 days from original schedule
? Increased deliveries accuracy from 98% to 100%
? Improved responsiveness to customer changes
? Integrated online communication with suppliers and vendors
? Decreased inventory cost of carrying by 10%
? Reduced discrepancies in process and transaction costs
IS IMPACT ON ERP
ERP- Enterprise Resource Management serves the role of an integrator of various functions in an
organisation. It helps to meet the organisational goals in a much more profound manner. The
system brings together various individual components such as inventory management,
purchasing, vendor, sales, customers, internet, SMS, accounting, payroll, vendors under a single
hub. This in turn allows quick decision making and easy data availability across the organisation.
Though the departments have been networked at Hero Cycles beforehand and legacy systems
were in place, SAP as expected has proven to be revolutionary by integrating all departments
like never before. The ERP system allows modernisation from industrial view point where speed,
performance and efficiency are of utmost concern. The present system makes available real time
data and thus helps in decision making that can be used to control the events.
ERP is not a system working on its own but comprises of various software applications working
together. At Hero Cycles, the areas that are already covered under ERP include Human
Relations, Logistics, Treasury, Materials and Finance. The real time access to common data has
made the whole historical system to a real time system.
Covering the area of customer relations, ERP allows the complete business and all divisions to
know better about the customers. This gives other divisions? customer data which helps in
managing the pre sales activities, to perform the sales processes by itself, to be able to service the
customers better and to identify purchasing trends to recognise opportunities for further sales.
All this helps in retaining the high value customers and enhance revenues. This serves as a
competitive advantage and helps in attaining insights for better product development.
Also the order filling time has considerably reduced. The moment an order is received,
information reaches to all concerned units via the database. This allows the manufacturing unit to
schedule their activities as per the order filling time and thus be able to deliver on time.
Company sources reveal the implementation of ERP has reduced the lead time by 60 %.
Due to constant data availability, the forecasts are much more realistic which decrease the
inventory at hand. This in turn decreases the inventory carrying cost and also decreases the
opportunity costs due to shortages. The Master Data is made available and can be shared across
the distribution channel.
Over the time ERP has helped in tackling various problems. Better workflow management and
quality control have resulted out of the systematic integration across the organisation. As the data
is live and real time, orders to suppliers get automatically generated whenever any material is in
shortage. This has helped to tackle the earlier problem in which constant watch had to be kept on
the inventory so as to be able to order on time in case of any shortages.
Figure 2.1: Data management in Hero cycles
As the various processes have become streamlined, there is a constant gauge on production
levels which has helped to raise the productivity levels. Constant monitoring helps to minimise
the delays which all add up to reducing the total delays in the system. This in turn leads to higher
production in the same time. The statistics reveal that the earlier time required for manufacturing
has reduced by 20 %. Thus the manufacturing time of a single bicycle has reduced to 80% of the
original time.
ERP has helped to bring people together who are working on the same project in different
divisions of the company. People might be working towards the same task but still work in silos
in absence of an integrating mechanism. But at Hero Cycles, people on share tasks get up-to-date
information which is uniform and unbiased.
The ERP package at Hero Cycles has 7 modules which include Cost Controlling, Sales and
Distribution, Material Management, Production Planning & Control, Plant maintenance, Quality
Management and Financial Accounting. Hero Cycles implemented SAP R/3 release 4.7
Enterprise, SAP version 4.7 Enterprise. They work under the environment of ABAP
programming language and Windows 98 client operating system. The department professionals
are trained by Siemens Information System Ltd.(SISL).
ERP also integrates the revenue cycle. Now right from invoice generation to cash receipt, every
transaction is updated as and when it occurs. This results in coordination between all 3 aspects of
Purchase Orders, Inventory Receipts and Costing.
But as always with ERP, there are certain constraints even at Hero Cycles such as the limited
customization of the ERP. Having spent a lot of time in its implementation, any further updates
and changes required are a costly concern. And although the company has benefited immensely
from the workflow improvements and efficiency, cost and lead time improvements, but there is
further scope of improvement for which the rigidity of ERP is a bottleneck.
Figure 2.2: ERP system at Hero Cycles
ROLE OF INFORMATION SYSTEMS IN CRM
Like every other successful company in which customers have a major part to play, the story of
Hero Cycles is one of significant achievement through determination, planning and will power.
All through its trail, the Group has had a passion of setting higher standards for its own self, with
an aim to deliver quality to its customers. An essential element for this objective has been the
role of Information Systems employed at Hero Cycles. The drive of to constantly update
technology and innovate in product offerings is what leads the group to achieve its objective of
satisfying customers in the best possible manner. This section of the project deals with the
impact of Information Systems on Customer Relationship Management at Hero Cycles.
To begin with, there are two types into which data can be classified – Master Data (a collection
of data about a person or object) and Transactional Data (data related to a single business
practice). While it is Master data that is of frequent use to any organization or firm in the market,
the job of Transactional data is to mechanically assign to each sale or purchase made, a unique
number which makes reference easier. It is the a combination of the two that Hero Cycles
maintains to keep track of its customers and the preserve their records, a major portion being
covered under the former head.
Creation of Master Data involves mentioning plant details, storage location, and transportation &
distribution details, among others. Once fed into it, the system matches these against machine &
time availability and production rate as available at the company. Broadly, Customer Master
Data is divided into the three categories of General, Sales and Company Code, under which the
SAP employed builds a database for Hero Cycles. General Data consists of a customer?s
personal information; Sales Data of the shipping and billing details; Company Code Data deals
with the coordination and insurance bit of any transaction. In this section of the project, we seek
to analyse how these three databases work in tandem to help maintain and analyse customer
records for the company (see appendix for a diagrammatic representation). In addition, we also
briefly discuss how the Information Systems employed by Hero Cycles allow for customers to
search for newer models, post online enquiries as well as make purchase orders.
As a repository of the customer?s details, generation of General Data consists of the following
steps:
? Creation of an Account Group that would determine the information to be entered
? Entering data (performed at the level of the client)
? Storage of the data under a specific Company Code
? Retrieval of data as per requirement
The objective of this data is to categorize customers and their transactions, as well as record tax
payment information and other income related details.
Next, the Sales Data that records the process which is followed when a transaction is made. This
includes ordering, shipping, delivery, term of payment and the billing details. The objective of
this data is to analyse customer priorities (mode of delivery, mode of payment, etc.) and then
refer back to these during repeat purchases by customers. An analysis of this information helps
the company put in place customer preferences, and the trend of changing preferences over the
years.
Finally, Company Code data is recorded once the preceding two categories are done away with.
This system deals with the customer entering his requirements for billing, shipping, etc. (see
appendix for a visual representation). A sufficient amount of information is said to be recorded
once priorities of delivery have been entered by the buyer into the system. A special function,
called the „Partner Function? is created to collect data regarding all the partners – coordination of
the process, insurance, and the like. Specific tabs are meant to fill in information that is direct as
well as in correspondence. These help the different departments working on the same data to
follow a defined sequence.
Another important part of maintenance of customer relationship is the management of the sales
data in the system. This includes not only the processing of Customer Master Data, but also its
customization according to the varying needs of customers. Following this, a sales is made by
combining the individual steps to form a sequence and hence process a transaction. A customer
can then view the series of documents with filled-in information and make enquiries.
The next step of dealing with a customer through its Information systems involves the delivery
of Hero cycles. The delivery document as built by the IS includes two parts – a Header and an
Item. While the latter describes a customer?s order in detail, the former gives information about
the goods delivered, the route used, and the like.
Then comes the Billing procedure. When a bill is documented, the R/3 system carries out a debit
on the credit receivables side and a credit on the revenue account. The interface of financial
accounting, as involved in the process is executed automatically. In some cases, there is a need
for an automatic transfer of transaction details from one department to another – this is when
information systems increase convenience.
The last step of the rung of customer relationship management constitutes provision of after-
sales service activities by the Hero group. This
is dependent on
the organization?s information systems by virtue
of being able to gauge customer requirements by
way of an online forum. Once the customer
needs have been gathered, these are then
allocated to the respective departments and dealt
with. Details are maintained post every service
to maintain a long term record of customer
information and hence refer back to them as per
requirements of the customer as well as the company.
Throughout the process, the given diagram is followed. CRM is the result of a concerted effort
employed both internally and externally, managed by the given division managers respectively.
The information system forms an important part of the triangle, connecting its different vertices
(stakeholders). The internal project manager at Hero cycles lies at the centre of the system of
maintenance of customer relationships, thus coordinating the entire process of transaction, sales
and after-sales service.
Over a longer term, CRM includes following a plan to stay in touch with those who have long
been customers. This requires the presence of an integrated information system connecting all
departments that require an interaction with the buyer. Once information flow becomes faster,
analysis is easier and so does the job of Hero Cycles to cater to the demand of its customers. As
the demand for the product and the number of customers increase, these get added to the
repository, thus strengthening the position of the Hero Group.
Figure 3.1: Project Management at Hero cycles
IMPACT OF INFORMATION SYSTEMS ON THE STRATEGIC EVOLUTION OF
HERO CYCLES
The Information Systems strategic vision of any organization is used to understand the
application of information technology in helping the organization attain a competitive advantage.
The usage of information technology systems must harmonize with the long term strategy of the
company. In this regard, Hero cycles has a robust IT infrastructure that serves as a supporting
pillar for its strategic vision and capabilities. As given in the figure 4.1, the information systems
network in Hero cycles, integrates the organizational strategy and business strategy in a
synergetic manner to ensure flexibility and adaptability to changes.
Business Strategy
Figure 4.1: Strategic alignment of Hero cycles--
Fig 4.2: I nformation systems driving competitive
advantage
Strategic cohesion of resources at Hero cycles
Information technology in Hero cycles is employed in major critical areas to create value for its
products and to minimize the costs. The strategic cohesion in Hero cycles has resulted in better
efficiency and effectiveness leading to better usage of IT systems to coordinate the process and
information flows to respond faster to both external and internal changes. Also IT has played a
major role in influencing the competitive targets i.e customers, suppliers and competitors. It has
helped in enhancing the customer service, reduced the bargaining power of the suppliers and
reducing the imitability of the applications and increased the expected duration for which the
applications have a competitive advantage. At Hero cycles, hardware, software, network
capabilities and data are aligned to ensure that the organization is able to strengthen its core
competency. The IT system in Hero cycles works in tandem with the business and organizational
level strategies to strengthen its manufacturing capability which is its core competency.
Organizational
strategy
Information
strategy
Electronic
integration
Collaborating
teams
Hero Cycles
organizatio
nal strategy
Organizational
effectiveness
Computing
software
Figure 3.2: Company code data screen
IT plays a major role in in determining the product, market, business network and boundary
positioning. For a growth oriented company, like Hero cycles it plays a major role in defining
the growth path. IT helps in integration of core activities apart from being a connector for all the
processes across the value chain from the supplier?s supplier to the customer?s customer.
The information systems department is equipped with the latest technologies and capabilities
that deliver superior results. The integrated system offers uniform, relevant and up to date
information on the day to day to day operations.
Database strategy at Hero cycles
Hero Cycles has a robust data management system for resource management and information
availability for the senior management. The real time data availability has ensured ready
availability of necessary information for faster decision making. The continuous availability of
information has resulted in better strategic decision making both at the business and corporate
levels. The data base management structure is diagrammatically explained in Figure 4.1
Hero cycles data base system is an example of database strategy and not simply a database
standard. The fully integrated database strategy goes deeper by associating individual
technologies with that of the business goals and corporate strategy. The database structure has
been designed taking into account considerations such as the criticality of the application for
future strategic decision making, continuous availability of data, complexity of data and the
scalability of the system. The system has a clustered database system to ensure that has scaling
up flexibilities and new features can be easily added as per the growing needs of the business.
It has resulted in evolving the business model of Hero cycles in times of greater competition and
has helped in demonstrating best in class capabilities due to greater accountability and
collaboration. Thus the IT enabled capabilities, values and strategies have resulted in a capital
efficient profitable growth resulting in enhanced investor confidence. These have resulted in a
“virtuous cycle” of innovation, productivity and increasing returns.
Figure 4.3: Data base architecture of Hero cycles
The enterprise wide software along with a robust database management system has resulted in an
optimum allocation of resources to different divisions. The resources and capabilities result in a
sustainable advantage that are in the form of micro assets that are hard to be imitate by other
organizations
Sales
Purchasing
Operations
Application
programs
Query language
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Accounting
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IMPACT OF IS ON DECISION MAKING
The management information system of Hero Cycles has played a very important role in taking
strategic and day-to-day functional decisions of an organization. Different SAP modules like
Cost Controlling, Sales and Distribution, Material Management, Production Planning and
Control, Plant Maintenance, Quality Management and Financial Accounting together integrate
into a single Management Information System and play a vital strategic role in the growth of
Hero Cycles. The consolidated report is generated by MIS which is then used by the executives
in taking strategic decisions. Following are the instances where MIS has assisted Hero Cycles in
its decision making process:
1. Improvement in design and manufacturing:
MIS has helped in improvement in design and manufacturing of the cycles. Collaborative
capabilities have been added to the CAD tools which has helped in inter-department
collaboration as a result of which every department be it marketing, purchasing personnel, etc.
are involved with manufacturing department right from the early-stage of development. As a
result there is free flow of information across various departments without any time lags and
every department is actively involved in the design and manufacturing process. For e.g.
marketing department depending on the consumer survey may like the manufacturing
department to introduce certain changes in the design of a particular cycle. It will enter the
information in the master database which design department can access. The design department
will then access the information and try to analyse the feasibility of the design. It will then
transfer the report to the manufacturing and marketing department with its final decision. It has
reduced the manufacturing time of a single bicycle to 80%. It has reduced the cycle time of
manufacturing a cycle time to 80%
2. Real time forecasting about the order delivery and handling the delays if any
One of the advantages of the suppliers? module of the sales and distribution module is that even
the suppliers can access it. As a result order is directly placed to the supplier online. Whenever
order is ready to be dispatched, supplier will enter the relevant information in the system. Real
time tracking of the dispatched order is done by the system which will help the purchasing
managers in taking better informed decisions. They will be able to make alternate plans on the
purchase of the materials if they get to know about the late delivery of the materials from the
designated source.
3. Comparing the suppliers’ performance and hence taking informed decisions
The Sales and Distribution module has the suppliers? management as a sub module. It will
consist of detailed information about each and every supplier: source from where the material is
procured, purchase price of the materials, lead time for the orders, number of times the supplier
has defaulted on the delivery date and also the number of days by which the order was delayed,
quality of the materials, other cost drivers, the competitors that the supplier is servicing, etc.
Monthly reports depending on above mentioned information is generated which will give a
detailed analysis of the suppliers? performance. This will then help in deciding on which
suppliers to continue sourcing products and services from and whether you should look out for
new suppliers. This system has increased timeliness of shipments to 99%.
4. Planning about the production of cycles
The way the production planning and control system works is that the parts? orders for
tomorrow?s production are set. That is, the main computer enters the cycle ID numbers that are
going to be produced. The server also decides which location is best to have that cycle
manufactured. Once that has been decided, the server notifies the parts makers who are on-line
as to where the parts should be delivered. The main computer decides the cycles to be produced
and the specifications and sends a communication to the servers that communicate with the
major parts makers and have similar systems, and can notify their suppliers in similar ways. ERP
has helped in reducing the lead time by 60%.
5. Inventory Control
The inventory management system assists in maintaining the right amount of inventory
depending on the future forecast of the demand. Moreover the daily reports generated about the
inventories helps in getting the correct information about the frequency of stock outs. Decisions
are then taken about the ways in which holding and stock out cost can be minimized. Nowadays
company is using automatic scanning of inventory at the interrogator date and information is
thus fed into the inventory management system. Real time data management about the inventory
flow at every level of the assembly line is fed into the system. This has helped in reducing the
cycle time and the flow time of the inventories. The system has increased inventory turns to over
30%
6. Better customer service
Detailed information about each and every customer is stored in the master data which will help
in assessing the frequency of orders by each customer, existing trends followed by them, demand
of different cycles, feedback, reviews on the after service provided, etc. This is helping in
forecasting the future demand and providing better services to the customer.
7. Decisions related to human resources management
The human resources management system has assisted in assessing employee performance and
subsequently taking appropriate decisions. Performance appraisal is used for taking various
decisions like promotion, training, increments, recognitions, career planning etc. It is more
effective in improving performance, building confidence, morale, training needs, as a motivator
to perform better and better. It also helps in self-development and self-evaluation.
8. Better accounting and financing decisions
Financial and accounting reports are generated through the procession of validated transactions
to their respective accounts. Such reports assist in assessing the financial health of the company
and future investment and growth opportunities. Accounting reports helps in doing the cost
benefit analysis. The participants in the capital markets, government institutions, business
partners, regulators, rating agencies, financial analysts, investment advisors, consulting agencies
and other users rely on accounting information and on the impartiality, honesty, integrity and
professional conduct of professional accountants in ensuring the quality of such information.
INFORMATION SYSTEMS GOVERNANCE
The aim of Hero Cycles over the years has been to manufacture and provide to its customers
high-quality cycles. Till the decade of 2000 audits within the company were given only a
minimal attention. But, with the rise of the number of policy regulations in India, Hero Cycles
began to search for an appropriate Information Systems network which would fall in line with its
business model and automate procedures. The major issue faced by the company thus was to
align the goals of management, audit and information technology. Hero Cycles thus initiated a
new department to focus on control and reduction of risk that focused on major values important
to the company. It was implemented by achieving consensus of all other departments ensuring
the quality standards were met.
Hero cycles then did not have proper IT controls and had no back up processes. Employees
possessed limited knowledge about control. Standards for productions were also minimal. If new
SAP system came in place it would contain all the information about the process and even
though it would lead Hero cycles to integrate new business practises it will introduce new risks.It
was essential for the employees to realize operating using manual processes and spreadsheets to
manage access risk is not only resource intensive and time consuming. It?s also costly and can
expose hero to unnecessary risk. SAP framework increased the awareness among all employees
even the non-technical workers the importance of compliance model and control
activities.HERO cycles has to comply to many regulations, including CMVR, and SAP enables a
shield which helps the company in locating the best control activity. For example, the employees
assume that implementing all the control activities produce better results .With SAP, the risk
team could show them that having few controls is better than having all the controls of which
many will be ineffective.
Tracking and reporting are 2 main components of IS governance. Group members should be
able to realise the importance of carry over and follow up with the management to ensure that
issue is effectively addressed. HERO cycles developed an MS Access issues-tracking database
to have joint IT and internal audit visibility to locate the known weaknesses in the project.
To adapt to the best internal change is also a key point of Hero?s goal, and SAP benchmarking
provided an valuable tool for this perspective. The management could view the information in
appropriate perspective and could have overall analysis. The framework provided peer
comparison report without any bias and was used for every IT audit. The company could decide
analysing the report for its future actions
BENEFITS
Before implementing the SAP framework, external auditing was done on basis of random
judgements. After implementing SAP, auditing was done on areas based on their business value.
For HERO cycles, one of the major reasons to adapting to SAP environment was to build a
strong IT environment. The salary processes and HR processes should be without errors. SAP
implementation has provided the controls which are most appropriate for Hero?s IT
environment. Payroll and software development processes now takes place with very less risks.
With suitable control procedures based on SAP, overall risks are reduced. Hero cycles have
found SAP to be a very effective framework for implementing and improving IT governance.
The SAP framework streamlined the process of developing a comprehensive set of IT policies.
Without SAP, this effort would not have been very effective and would have required an
inordinate amount of time.
The numerous benefits of SAP make it a successful model for central control. In addition, the
following advantages have been seen at Hero Cycles by virtue of SAP-
? Frameworks, both internal and external can be mapped by the IT governance personnel
? A uniform standard for the end customers
? A focused approach is followed
? An objective purview of the external environment can be assessed
? Different frameworks can be integrated
? It helps to achieve an external audit agreement on the company?s status
? Causes and implications of the different company issues can be listed
? Decrease revenue leakage by improving quoting accuracy
? Streamline information governance processes through standardization and automation
? Better data quality to drive process improvement across multiple business channels
? Faster financial close and improved financial reporting
? Greater compliance with governance policies through centralized management and
enhanced user experience
? Implemented proactive information governance model
Future Directions
Hero Cycles is planning to conduct an IT governance audit using SAP IT, a governance
framework that helps management compute an estimated return on investment (ROI) for IT-
enabled investments. Company employees are now aware that they need to understand control is
meeting the objectives rather than just knowing which control is appropriate.
CONCLUSION
With an annual revenue generation of over 2500 crores, Hero Cycles has been able to
successfully stick to its objective of providing an appreciable service to the hundreds of
customers that it currently serves and the ones it plans to add to its base in the years to come.
The Information System employed by the company affects not only its everyday operations, but
also in its strategic influence. Operational excellence and CRM form a part of its transaction
process, and hence are backed by the IT network installed at the company.
For a customer, a transaction involves his order, a black box of procedure and then a delivery for
his order. It is in this black box, not visible to the customer, that the role of the Information
Systems becomes primary. From regulating the everyday functions of manufacturing to gauging
the strategies important for decision making, transfer of data is required heavily by the
organization for the ease of processing transactions and hence an overall supervision of the
supply chain, integrating the different departments. The SAP installed assists the company in
maintenance of records, processing of customer requests, and keeping tthem in store for future
reference.
Over the years, the Hero Group has strived to achieve a balance between the technology it
employs, human resources and service delivery to its customers. With SAP R/3 4.7 as its
backbone to reduce effort, decrease paper work and automate processes involved, the company
achieves a sizeable margin as well as an incentive to innovate and grow in future.
REFERENCES
The Primary Source of information used to compile this project report has been to interview the
current employees at Hero Cycles.
Further, the Secondary Sources are as listed below. Our research primarily stems from the first
three mentioned in the list. However, the other documents have been instrumental in providing
conceptual clarity to us, regarding the system installed by the company, and its functioning.
1.http://issuu.com/sanjaykumarguptaa/docs/erp-in-hero-cycles
2. Bose, R. (2002). Customer relationship management: key components for IT success.
industrial management & data systems, 102(2), 89-97
3. Bhatia, B. S. (2005). Global Competitiveness and Productivity. Deep and Deep
Publications.
4.http://www.gazhoo.com/doc/201205140150084376/ERP+in+Hero+Cycles
5. Quarterly Results Q1 (Apr-Jun'13) - Hero MotoCorp
6. Quarterly Results Q1 (Apr-Jun'12) - Hero MotoCorp
7. Annual Report (2010) - Hero MotoCorp
8. Articles published in the Times of India and Business Today
Member wise contributions
AJMERA CHAND KISHOR
Analyzed the effectiveness of Information
systems in decision making that includes HRM,
inventory control, supplier management and other
major areas of Hero Cycles. Also worked on
introduction of the topic through collection of
data from primary and secondary resources in
coordination with other team members
CHUBASENLA JAMIR
Worked on the impact of IS in SCM including
the value drivers, mySAP, business outcomes,
value realization and other major competencies of
Hero Cycles, through analysis of primary and
secondary data in coordination with other team
members.
KIRAN KANNAN P
Analysed the Information systems corporate
governance including IS controls, benefits and
advantages and future directions for the same
through analysis of primary and secondary data in
coordination with other team members.
PAMAL PREET SINGH
Analysed the effectiveness of Information
systems in ERP that includes logistics, material
management, revenue systems and other related
modules through the analysis of primary and
secondary data in coordination with the team
members.
S VAISHNAVI
Worked on the analysis of the impact of IS in
strategic evolution of Hero cycles with emphasis
on strategic cohesion, database strategy, strategic
alignment and organizational strategy of Hero
Cycles. The analysis was done using the primary
and secondary data sources in coordination with
all the group members.
SUHANI POPLI
Working on the analysis of Information systems
impact on CRM that includes different types of
customer data and project management. Also
contributed to the conclusion through detailed
analysis of the primary and secondary data
sources in coordination with all the members.
doc_338460887.pdf
at Hero Motorcycles
Final Project Report
Submitter by
Group 4 (Section D)
PGP/17/192 AJMERA CHAND KISHOR
PGP/17/203 CHUBASENLA JAMIR
PGP/17/214 KIRAN KANNAN P
PGP/17/224 PAMAL PREET SINGH
PGP/17/234 S VAISHNAVI
PGP/17/244 SUHANI POPLI
Submitted to
Prof Anindita Paul
Assistant Professor
IT & Systems
Table of contents
Introduction 1
Scope of the project 1
Initial observation 1
Impact of Information systems in Hero Cycles
Supply Chain Management 1
Enterprise resource planning 5
Customer Relationship Management 7
Strategic evolution 9
Decision making 11
IS governance 12
Conclusion 14
References 14
Member wise contribution 15
Information Systems at Hero Cycles
Hero cycles, the flagship company of O. P. Munjal Group Of Companies, is the world?s largest
manufacturer of bicycles with record annual sales volume of 5.6 million cycles in 2011. Hero
cycles is headquartered in Ludhiana, Punjab and was founded in 1956. The hero plant is rolling
out one bicycle every 9 seconds and is named by the Guinness book of world records as the
world?s largest producer of bicycles. The well-known two wheeler brand Hero MotorCorp is
also a subsidiary of Hero Cycles.
A worldwide company, Hero Cycles makes an effort to maintain synergy between its employees
and customers, which is enabled by the well-established Information system network possessed
by the group. Hero uses SAP to integrate all its departments through one thread, relying less on
paperwork and making information readily available to all parts of the organization. The
company's success can also be credited to the management's vision to align information
technology with business. It views IT as a strategic tool, which can help organisations in
achieving their goals and objectives. Says SR Bala Subramaniam,VP, Technology.
In this project, we have analysed the effectiveness of Hero?s Information systems and
technology in different domains of decision making, customer relationship management, and
supply chain management, among others in the 250 workstations owned by the group.
SCOPE OF THE PROJECT
ERP in Hero Cycles helps to integrate various functions thereby helping the company
achieve its organizational goals. Hero Cycles also use various SAP Modules such as Assets
Management, Project Systems and Workflow etc. Through this report we intend to study
how they manage and supervise individual aspects of asset purchase and sales, support the
planning, control and monitoring of long-term, highly complex projects with defined goals,
how they plan their plant maintenance for servicing and rebuilding equipment. The main
focus is on the procurement and inventory functions occurring in day-to-day business
operations such as purchasing, inventory management, and reorder point processing. Also
the SAP modules such as Quality Management and Production Planning which are used
for quality planning, inspection, and control for manufacturing and procurement and for
planning and controlling manufacturing activities are to be used. ERP has helped in
reducing the lead time by 60%, increased timeliness of shipments to 99%, increased
inventory turns to over 30% and reduced the manufacturing time of a single bicycle to
80%.
INITIAL OBSERVATION:
Hero Cycles has extensively benefited from the use of ERP by ensuring better quality of
bicycles and a manufacturing time of bicycle reduced to 80% of the initial time. It has
improved workflow and efficiency and given a better control over its resources.
EFFECTIVENESS OF INFORMATION SYSTEMS IN SUPPLY CHAIN
MANAGEMENT
Prior to the implementation of IS in Hero cycles and motocorp, the company used to receive
orders in the form of spreadsheets, emails and phone calls from their dealers. The process was
not streamlined and took a few days to weeks to pool the dealer?s data and consolidate them.
This also led to incorrect and inconsistent data from the supplier and vendor end. Hero cycles
and motocorp thus decided to implement an in-house IS that works on various platforms. This
enabled them to tailor-made the system to their requirements and style of work.
The dealer portal was a web-based business partner site to communicate and collaborate with the
dealers and vendors across its network. The portal enabled to exchange sales and order
information but there were inconsistencies in the sales and service processes followed by the
dealers.
Also the legacy IS took care of only the data processing part, leaving the real MIS data in
spreadsheets leading to fragmented and unstructured data. Sooner Hero realized the need for a
centralized system. This would enable the organization to achieve integration across systems,
improve business processes and cover the totality of supply chain from inventory forecasting to
delivery and after sales and better business decision making.
Value drivers
The Company?s Supply Chain Management function is built on three planks -Cost, Quality and
sustainability. Tracking inventory cost effectively and efficiently is therefore a key competitive
advantage.
The objective of the centralized IS is to enhance operational efficiency at the organisation and
dealer level and standardize customer experience. Other driving factors were:
? Improve information exchange with suppliers and vendors
? Enable suppliers and dealers to transact online using standardized and seamless process
? To accelerate the order processing system
? Better forecast inventory and improve JIT to maintain supply in line with the demand
? Single point of information for better decision making
Hero group always had a strong focus on supply chain integration, process efficiency and
accurate as well as prompt decision- making. Hero group evaluated several vendors, including
SAP, BaaN and Oracle. Extensive study has been made by hero cycles on each of the candidate
solutions. Huge presence in the automotive sector, feedback from reference customers, a
solution closer to their requirements and proven expertise in engineering made SAP as the
choice of technology. The implementation began in June 2000 and completed in Feb, 2001. The
flexible solution enabled the group to better respond to customer changes, cut time to delivery,
and eliminate waste.
More on mySAP
mySAP Supplier Relationship Management (mySAP SRM) automates processes between
sourcing and procurement, within the enterprise, and across the supply base. Thanks to the open
architecture of SAP NetWeaver platform, mySAP enables increased supply chain visibility and a
closed-loop insight of their global spend. This armed Hero to have an end to end control in the
supply cycle - from strategy to execution, enabled them to optimize supplier selection, compress
cycle times, and helped in building sustainable, workable supplier relationships. The
consolidated content and master data of mySAP SRM helped Hero group make quick and
efficient decisions that align with corporate strategy.
Business outcome
The software gave a competitive advantage to Hero group by enabling the suppliers and dealer
to perform online transactions. mySAP helped improving quality, access and usage of
transactional data and eliminated redundant entries. The software also eliminated manual
reconciliation and improved operational efficiency at various stages. Standardized order
processing, real time information on product cost, profitability, production and delivery status,
single point of data enabled vast dealer and vendor network to get correct and accurate
information on the status of orders, leading to improved relations.
Value realization
By the end of the year 2012, the system was successfully deployed at 645 dealerships across the
country. The system helped Hero group in various ways -
? Reduced supply chain order processing by 3 days from original schedule
? Increased deliveries accuracy from 98% to 100%
? Improved responsiveness to customer changes
? Integrated online communication with suppliers and vendors
? Decreased inventory cost of carrying by 10%
? Reduced discrepancies in process and transaction costs
IS IMPACT ON ERP
ERP- Enterprise Resource Management serves the role of an integrator of various functions in an
organisation. It helps to meet the organisational goals in a much more profound manner. The
system brings together various individual components such as inventory management,
purchasing, vendor, sales, customers, internet, SMS, accounting, payroll, vendors under a single
hub. This in turn allows quick decision making and easy data availability across the organisation.
Though the departments have been networked at Hero Cycles beforehand and legacy systems
were in place, SAP as expected has proven to be revolutionary by integrating all departments
like never before. The ERP system allows modernisation from industrial view point where speed,
performance and efficiency are of utmost concern. The present system makes available real time
data and thus helps in decision making that can be used to control the events.
ERP is not a system working on its own but comprises of various software applications working
together. At Hero Cycles, the areas that are already covered under ERP include Human
Relations, Logistics, Treasury, Materials and Finance. The real time access to common data has
made the whole historical system to a real time system.
Covering the area of customer relations, ERP allows the complete business and all divisions to
know better about the customers. This gives other divisions? customer data which helps in
managing the pre sales activities, to perform the sales processes by itself, to be able to service the
customers better and to identify purchasing trends to recognise opportunities for further sales.
All this helps in retaining the high value customers and enhance revenues. This serves as a
competitive advantage and helps in attaining insights for better product development.
Also the order filling time has considerably reduced. The moment an order is received,
information reaches to all concerned units via the database. This allows the manufacturing unit to
schedule their activities as per the order filling time and thus be able to deliver on time.
Company sources reveal the implementation of ERP has reduced the lead time by 60 %.
Due to constant data availability, the forecasts are much more realistic which decrease the
inventory at hand. This in turn decreases the inventory carrying cost and also decreases the
opportunity costs due to shortages. The Master Data is made available and can be shared across
the distribution channel.
Over the time ERP has helped in tackling various problems. Better workflow management and
quality control have resulted out of the systematic integration across the organisation. As the data
is live and real time, orders to suppliers get automatically generated whenever any material is in
shortage. This has helped to tackle the earlier problem in which constant watch had to be kept on
the inventory so as to be able to order on time in case of any shortages.
Figure 2.1: Data management in Hero cycles
As the various processes have become streamlined, there is a constant gauge on production
levels which has helped to raise the productivity levels. Constant monitoring helps to minimise
the delays which all add up to reducing the total delays in the system. This in turn leads to higher
production in the same time. The statistics reveal that the earlier time required for manufacturing
has reduced by 20 %. Thus the manufacturing time of a single bicycle has reduced to 80% of the
original time.
ERP has helped to bring people together who are working on the same project in different
divisions of the company. People might be working towards the same task but still work in silos
in absence of an integrating mechanism. But at Hero Cycles, people on share tasks get up-to-date
information which is uniform and unbiased.
The ERP package at Hero Cycles has 7 modules which include Cost Controlling, Sales and
Distribution, Material Management, Production Planning & Control, Plant maintenance, Quality
Management and Financial Accounting. Hero Cycles implemented SAP R/3 release 4.7
Enterprise, SAP version 4.7 Enterprise. They work under the environment of ABAP
programming language and Windows 98 client operating system. The department professionals
are trained by Siemens Information System Ltd.(SISL).
ERP also integrates the revenue cycle. Now right from invoice generation to cash receipt, every
transaction is updated as and when it occurs. This results in coordination between all 3 aspects of
Purchase Orders, Inventory Receipts and Costing.
But as always with ERP, there are certain constraints even at Hero Cycles such as the limited
customization of the ERP. Having spent a lot of time in its implementation, any further updates
and changes required are a costly concern. And although the company has benefited immensely
from the workflow improvements and efficiency, cost and lead time improvements, but there is
further scope of improvement for which the rigidity of ERP is a bottleneck.
Figure 2.2: ERP system at Hero Cycles
ROLE OF INFORMATION SYSTEMS IN CRM
Like every other successful company in which customers have a major part to play, the story of
Hero Cycles is one of significant achievement through determination, planning and will power.
All through its trail, the Group has had a passion of setting higher standards for its own self, with
an aim to deliver quality to its customers. An essential element for this objective has been the
role of Information Systems employed at Hero Cycles. The drive of to constantly update
technology and innovate in product offerings is what leads the group to achieve its objective of
satisfying customers in the best possible manner. This section of the project deals with the
impact of Information Systems on Customer Relationship Management at Hero Cycles.
To begin with, there are two types into which data can be classified – Master Data (a collection
of data about a person or object) and Transactional Data (data related to a single business
practice). While it is Master data that is of frequent use to any organization or firm in the market,
the job of Transactional data is to mechanically assign to each sale or purchase made, a unique
number which makes reference easier. It is the a combination of the two that Hero Cycles
maintains to keep track of its customers and the preserve their records, a major portion being
covered under the former head.
Creation of Master Data involves mentioning plant details, storage location, and transportation &
distribution details, among others. Once fed into it, the system matches these against machine &
time availability and production rate as available at the company. Broadly, Customer Master
Data is divided into the three categories of General, Sales and Company Code, under which the
SAP employed builds a database for Hero Cycles. General Data consists of a customer?s
personal information; Sales Data of the shipping and billing details; Company Code Data deals
with the coordination and insurance bit of any transaction. In this section of the project, we seek
to analyse how these three databases work in tandem to help maintain and analyse customer
records for the company (see appendix for a diagrammatic representation). In addition, we also
briefly discuss how the Information Systems employed by Hero Cycles allow for customers to
search for newer models, post online enquiries as well as make purchase orders.
As a repository of the customer?s details, generation of General Data consists of the following
steps:
? Creation of an Account Group that would determine the information to be entered
? Entering data (performed at the level of the client)
? Storage of the data under a specific Company Code
? Retrieval of data as per requirement
The objective of this data is to categorize customers and their transactions, as well as record tax
payment information and other income related details.
Next, the Sales Data that records the process which is followed when a transaction is made. This
includes ordering, shipping, delivery, term of payment and the billing details. The objective of
this data is to analyse customer priorities (mode of delivery, mode of payment, etc.) and then
refer back to these during repeat purchases by customers. An analysis of this information helps
the company put in place customer preferences, and the trend of changing preferences over the
years.
Finally, Company Code data is recorded once the preceding two categories are done away with.
This system deals with the customer entering his requirements for billing, shipping, etc. (see
appendix for a visual representation). A sufficient amount of information is said to be recorded
once priorities of delivery have been entered by the buyer into the system. A special function,
called the „Partner Function? is created to collect data regarding all the partners – coordination of
the process, insurance, and the like. Specific tabs are meant to fill in information that is direct as
well as in correspondence. These help the different departments working on the same data to
follow a defined sequence.
Another important part of maintenance of customer relationship is the management of the sales
data in the system. This includes not only the processing of Customer Master Data, but also its
customization according to the varying needs of customers. Following this, a sales is made by
combining the individual steps to form a sequence and hence process a transaction. A customer
can then view the series of documents with filled-in information and make enquiries.
The next step of dealing with a customer through its Information systems involves the delivery
of Hero cycles. The delivery document as built by the IS includes two parts – a Header and an
Item. While the latter describes a customer?s order in detail, the former gives information about
the goods delivered, the route used, and the like.
Then comes the Billing procedure. When a bill is documented, the R/3 system carries out a debit
on the credit receivables side and a credit on the revenue account. The interface of financial
accounting, as involved in the process is executed automatically. In some cases, there is a need
for an automatic transfer of transaction details from one department to another – this is when
information systems increase convenience.
The last step of the rung of customer relationship management constitutes provision of after-
sales service activities by the Hero group. This
is dependent on
the organization?s information systems by virtue
of being able to gauge customer requirements by
way of an online forum. Once the customer
needs have been gathered, these are then
allocated to the respective departments and dealt
with. Details are maintained post every service
to maintain a long term record of customer
information and hence refer back to them as per
requirements of the customer as well as the company.
Throughout the process, the given diagram is followed. CRM is the result of a concerted effort
employed both internally and externally, managed by the given division managers respectively.
The information system forms an important part of the triangle, connecting its different vertices
(stakeholders). The internal project manager at Hero cycles lies at the centre of the system of
maintenance of customer relationships, thus coordinating the entire process of transaction, sales
and after-sales service.
Over a longer term, CRM includes following a plan to stay in touch with those who have long
been customers. This requires the presence of an integrated information system connecting all
departments that require an interaction with the buyer. Once information flow becomes faster,
analysis is easier and so does the job of Hero Cycles to cater to the demand of its customers. As
the demand for the product and the number of customers increase, these get added to the
repository, thus strengthening the position of the Hero Group.
Figure 3.1: Project Management at Hero cycles
IMPACT OF INFORMATION SYSTEMS ON THE STRATEGIC EVOLUTION OF
HERO CYCLES
The Information Systems strategic vision of any organization is used to understand the
application of information technology in helping the organization attain a competitive advantage.
The usage of information technology systems must harmonize with the long term strategy of the
company. In this regard, Hero cycles has a robust IT infrastructure that serves as a supporting
pillar for its strategic vision and capabilities. As given in the figure 4.1, the information systems
network in Hero cycles, integrates the organizational strategy and business strategy in a
synergetic manner to ensure flexibility and adaptability to changes.
Business Strategy
Figure 4.1: Strategic alignment of Hero cycles--
Fig 4.2: I nformation systems driving competitive
advantage
Strategic cohesion of resources at Hero cycles
Information technology in Hero cycles is employed in major critical areas to create value for its
products and to minimize the costs. The strategic cohesion in Hero cycles has resulted in better
efficiency and effectiveness leading to better usage of IT systems to coordinate the process and
information flows to respond faster to both external and internal changes. Also IT has played a
major role in influencing the competitive targets i.e customers, suppliers and competitors. It has
helped in enhancing the customer service, reduced the bargaining power of the suppliers and
reducing the imitability of the applications and increased the expected duration for which the
applications have a competitive advantage. At Hero cycles, hardware, software, network
capabilities and data are aligned to ensure that the organization is able to strengthen its core
competency. The IT system in Hero cycles works in tandem with the business and organizational
level strategies to strengthen its manufacturing capability which is its core competency.
Organizational
strategy
Information
strategy
Electronic
integration
Collaborating
teams
Hero Cycles
organizatio
nal strategy
Organizational
effectiveness
Computing
software
Figure 3.2: Company code data screen
IT plays a major role in in determining the product, market, business network and boundary
positioning. For a growth oriented company, like Hero cycles it plays a major role in defining
the growth path. IT helps in integration of core activities apart from being a connector for all the
processes across the value chain from the supplier?s supplier to the customer?s customer.
The information systems department is equipped with the latest technologies and capabilities
that deliver superior results. The integrated system offers uniform, relevant and up to date
information on the day to day to day operations.
Database strategy at Hero cycles
Hero Cycles has a robust data management system for resource management and information
availability for the senior management. The real time data availability has ensured ready
availability of necessary information for faster decision making. The continuous availability of
information has resulted in better strategic decision making both at the business and corporate
levels. The data base management structure is diagrammatically explained in Figure 4.1
Hero cycles data base system is an example of database strategy and not simply a database
standard. The fully integrated database strategy goes deeper by associating individual
technologies with that of the business goals and corporate strategy. The database structure has
been designed taking into account considerations such as the criticality of the application for
future strategic decision making, continuous availability of data, complexity of data and the
scalability of the system. The system has a clustered database system to ensure that has scaling
up flexibilities and new features can be easily added as per the growing needs of the business.
It has resulted in evolving the business model of Hero cycles in times of greater competition and
has helped in demonstrating best in class capabilities due to greater accountability and
collaboration. Thus the IT enabled capabilities, values and strategies have resulted in a capital
efficient profitable growth resulting in enhanced investor confidence. These have resulted in a
“virtuous cycle” of innovation, productivity and increasing returns.
Figure 4.3: Data base architecture of Hero cycles
The enterprise wide software along with a robust database management system has resulted in an
optimum allocation of resources to different divisions. The resources and capabilities result in a
sustainable advantage that are in the form of micro assets that are hard to be imitate by other
organizations
Sales
Purchasing
Operations
Application
programs
Query language
D
B
M
S
Accounting
D
a
t
a
b
a
s
e
IMPACT OF IS ON DECISION MAKING
The management information system of Hero Cycles has played a very important role in taking
strategic and day-to-day functional decisions of an organization. Different SAP modules like
Cost Controlling, Sales and Distribution, Material Management, Production Planning and
Control, Plant Maintenance, Quality Management and Financial Accounting together integrate
into a single Management Information System and play a vital strategic role in the growth of
Hero Cycles. The consolidated report is generated by MIS which is then used by the executives
in taking strategic decisions. Following are the instances where MIS has assisted Hero Cycles in
its decision making process:
1. Improvement in design and manufacturing:
MIS has helped in improvement in design and manufacturing of the cycles. Collaborative
capabilities have been added to the CAD tools which has helped in inter-department
collaboration as a result of which every department be it marketing, purchasing personnel, etc.
are involved with manufacturing department right from the early-stage of development. As a
result there is free flow of information across various departments without any time lags and
every department is actively involved in the design and manufacturing process. For e.g.
marketing department depending on the consumer survey may like the manufacturing
department to introduce certain changes in the design of a particular cycle. It will enter the
information in the master database which design department can access. The design department
will then access the information and try to analyse the feasibility of the design. It will then
transfer the report to the manufacturing and marketing department with its final decision. It has
reduced the manufacturing time of a single bicycle to 80%. It has reduced the cycle time of
manufacturing a cycle time to 80%
2. Real time forecasting about the order delivery and handling the delays if any
One of the advantages of the suppliers? module of the sales and distribution module is that even
the suppliers can access it. As a result order is directly placed to the supplier online. Whenever
order is ready to be dispatched, supplier will enter the relevant information in the system. Real
time tracking of the dispatched order is done by the system which will help the purchasing
managers in taking better informed decisions. They will be able to make alternate plans on the
purchase of the materials if they get to know about the late delivery of the materials from the
designated source.
3. Comparing the suppliers’ performance and hence taking informed decisions
The Sales and Distribution module has the suppliers? management as a sub module. It will
consist of detailed information about each and every supplier: source from where the material is
procured, purchase price of the materials, lead time for the orders, number of times the supplier
has defaulted on the delivery date and also the number of days by which the order was delayed,
quality of the materials, other cost drivers, the competitors that the supplier is servicing, etc.
Monthly reports depending on above mentioned information is generated which will give a
detailed analysis of the suppliers? performance. This will then help in deciding on which
suppliers to continue sourcing products and services from and whether you should look out for
new suppliers. This system has increased timeliness of shipments to 99%.
4. Planning about the production of cycles
The way the production planning and control system works is that the parts? orders for
tomorrow?s production are set. That is, the main computer enters the cycle ID numbers that are
going to be produced. The server also decides which location is best to have that cycle
manufactured. Once that has been decided, the server notifies the parts makers who are on-line
as to where the parts should be delivered. The main computer decides the cycles to be produced
and the specifications and sends a communication to the servers that communicate with the
major parts makers and have similar systems, and can notify their suppliers in similar ways. ERP
has helped in reducing the lead time by 60%.
5. Inventory Control
The inventory management system assists in maintaining the right amount of inventory
depending on the future forecast of the demand. Moreover the daily reports generated about the
inventories helps in getting the correct information about the frequency of stock outs. Decisions
are then taken about the ways in which holding and stock out cost can be minimized. Nowadays
company is using automatic scanning of inventory at the interrogator date and information is
thus fed into the inventory management system. Real time data management about the inventory
flow at every level of the assembly line is fed into the system. This has helped in reducing the
cycle time and the flow time of the inventories. The system has increased inventory turns to over
30%
6. Better customer service
Detailed information about each and every customer is stored in the master data which will help
in assessing the frequency of orders by each customer, existing trends followed by them, demand
of different cycles, feedback, reviews on the after service provided, etc. This is helping in
forecasting the future demand and providing better services to the customer.
7. Decisions related to human resources management
The human resources management system has assisted in assessing employee performance and
subsequently taking appropriate decisions. Performance appraisal is used for taking various
decisions like promotion, training, increments, recognitions, career planning etc. It is more
effective in improving performance, building confidence, morale, training needs, as a motivator
to perform better and better. It also helps in self-development and self-evaluation.
8. Better accounting and financing decisions
Financial and accounting reports are generated through the procession of validated transactions
to their respective accounts. Such reports assist in assessing the financial health of the company
and future investment and growth opportunities. Accounting reports helps in doing the cost
benefit analysis. The participants in the capital markets, government institutions, business
partners, regulators, rating agencies, financial analysts, investment advisors, consulting agencies
and other users rely on accounting information and on the impartiality, honesty, integrity and
professional conduct of professional accountants in ensuring the quality of such information.
INFORMATION SYSTEMS GOVERNANCE
The aim of Hero Cycles over the years has been to manufacture and provide to its customers
high-quality cycles. Till the decade of 2000 audits within the company were given only a
minimal attention. But, with the rise of the number of policy regulations in India, Hero Cycles
began to search for an appropriate Information Systems network which would fall in line with its
business model and automate procedures. The major issue faced by the company thus was to
align the goals of management, audit and information technology. Hero Cycles thus initiated a
new department to focus on control and reduction of risk that focused on major values important
to the company. It was implemented by achieving consensus of all other departments ensuring
the quality standards were met.
Hero cycles then did not have proper IT controls and had no back up processes. Employees
possessed limited knowledge about control. Standards for productions were also minimal. If new
SAP system came in place it would contain all the information about the process and even
though it would lead Hero cycles to integrate new business practises it will introduce new risks.It
was essential for the employees to realize operating using manual processes and spreadsheets to
manage access risk is not only resource intensive and time consuming. It?s also costly and can
expose hero to unnecessary risk. SAP framework increased the awareness among all employees
even the non-technical workers the importance of compliance model and control
activities.HERO cycles has to comply to many regulations, including CMVR, and SAP enables a
shield which helps the company in locating the best control activity. For example, the employees
assume that implementing all the control activities produce better results .With SAP, the risk
team could show them that having few controls is better than having all the controls of which
many will be ineffective.
Tracking and reporting are 2 main components of IS governance. Group members should be
able to realise the importance of carry over and follow up with the management to ensure that
issue is effectively addressed. HERO cycles developed an MS Access issues-tracking database
to have joint IT and internal audit visibility to locate the known weaknesses in the project.
To adapt to the best internal change is also a key point of Hero?s goal, and SAP benchmarking
provided an valuable tool for this perspective. The management could view the information in
appropriate perspective and could have overall analysis. The framework provided peer
comparison report without any bias and was used for every IT audit. The company could decide
analysing the report for its future actions
BENEFITS
Before implementing the SAP framework, external auditing was done on basis of random
judgements. After implementing SAP, auditing was done on areas based on their business value.
For HERO cycles, one of the major reasons to adapting to SAP environment was to build a
strong IT environment. The salary processes and HR processes should be without errors. SAP
implementation has provided the controls which are most appropriate for Hero?s IT
environment. Payroll and software development processes now takes place with very less risks.
With suitable control procedures based on SAP, overall risks are reduced. Hero cycles have
found SAP to be a very effective framework for implementing and improving IT governance.
The SAP framework streamlined the process of developing a comprehensive set of IT policies.
Without SAP, this effort would not have been very effective and would have required an
inordinate amount of time.
The numerous benefits of SAP make it a successful model for central control. In addition, the
following advantages have been seen at Hero Cycles by virtue of SAP-
? Frameworks, both internal and external can be mapped by the IT governance personnel
? A uniform standard for the end customers
? A focused approach is followed
? An objective purview of the external environment can be assessed
? Different frameworks can be integrated
? It helps to achieve an external audit agreement on the company?s status
? Causes and implications of the different company issues can be listed
? Decrease revenue leakage by improving quoting accuracy
? Streamline information governance processes through standardization and automation
? Better data quality to drive process improvement across multiple business channels
? Faster financial close and improved financial reporting
? Greater compliance with governance policies through centralized management and
enhanced user experience
? Implemented proactive information governance model
Future Directions
Hero Cycles is planning to conduct an IT governance audit using SAP IT, a governance
framework that helps management compute an estimated return on investment (ROI) for IT-
enabled investments. Company employees are now aware that they need to understand control is
meeting the objectives rather than just knowing which control is appropriate.
CONCLUSION
With an annual revenue generation of over 2500 crores, Hero Cycles has been able to
successfully stick to its objective of providing an appreciable service to the hundreds of
customers that it currently serves and the ones it plans to add to its base in the years to come.
The Information System employed by the company affects not only its everyday operations, but
also in its strategic influence. Operational excellence and CRM form a part of its transaction
process, and hence are backed by the IT network installed at the company.
For a customer, a transaction involves his order, a black box of procedure and then a delivery for
his order. It is in this black box, not visible to the customer, that the role of the Information
Systems becomes primary. From regulating the everyday functions of manufacturing to gauging
the strategies important for decision making, transfer of data is required heavily by the
organization for the ease of processing transactions and hence an overall supervision of the
supply chain, integrating the different departments. The SAP installed assists the company in
maintenance of records, processing of customer requests, and keeping tthem in store for future
reference.
Over the years, the Hero Group has strived to achieve a balance between the technology it
employs, human resources and service delivery to its customers. With SAP R/3 4.7 as its
backbone to reduce effort, decrease paper work and automate processes involved, the company
achieves a sizeable margin as well as an incentive to innovate and grow in future.
REFERENCES
The Primary Source of information used to compile this project report has been to interview the
current employees at Hero Cycles.
Further, the Secondary Sources are as listed below. Our research primarily stems from the first
three mentioned in the list. However, the other documents have been instrumental in providing
conceptual clarity to us, regarding the system installed by the company, and its functioning.
1.http://issuu.com/sanjaykumarguptaa/docs/erp-in-hero-cycles
2. Bose, R. (2002). Customer relationship management: key components for IT success.
industrial management & data systems, 102(2), 89-97
3. Bhatia, B. S. (2005). Global Competitiveness and Productivity. Deep and Deep
Publications.
4.http://www.gazhoo.com/doc/201205140150084376/ERP+in+Hero+Cycles
5. Quarterly Results Q1 (Apr-Jun'13) - Hero MotoCorp
6. Quarterly Results Q1 (Apr-Jun'12) - Hero MotoCorp
7. Annual Report (2010) - Hero MotoCorp
8. Articles published in the Times of India and Business Today
Member wise contributions
AJMERA CHAND KISHOR
Analyzed the effectiveness of Information
systems in decision making that includes HRM,
inventory control, supplier management and other
major areas of Hero Cycles. Also worked on
introduction of the topic through collection of
data from primary and secondary resources in
coordination with other team members
CHUBASENLA JAMIR
Worked on the impact of IS in SCM including
the value drivers, mySAP, business outcomes,
value realization and other major competencies of
Hero Cycles, through analysis of primary and
secondary data in coordination with other team
members.
KIRAN KANNAN P
Analysed the Information systems corporate
governance including IS controls, benefits and
advantages and future directions for the same
through analysis of primary and secondary data in
coordination with other team members.
PAMAL PREET SINGH
Analysed the effectiveness of Information
systems in ERP that includes logistics, material
management, revenue systems and other related
modules through the analysis of primary and
secondary data in coordination with the team
members.
S VAISHNAVI
Worked on the analysis of the impact of IS in
strategic evolution of Hero cycles with emphasis
on strategic cohesion, database strategy, strategic
alignment and organizational strategy of Hero
Cycles. The analysis was done using the primary
and secondary data sources in coordination with
all the group members.
SUHANI POPLI
Working on the analysis of Information systems
impact on CRM that includes different types of
customer data and project management. Also
contributed to the conclusion through detailed
analysis of the primary and secondary data
sources in coordination with all the members.
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