Harvesting an IT-Aligned Business: Putting Experts In-Charge
In business for a decade, the Fauji Fertilizer Bin Qasim Limited (FFBL) is the only producer and distributor of Granular Urea, and the largest for Di-Ammonium Phosphate (DAP) fertilizer in Pakistan. For a business that is relatively nascent, FFBL has gone through multiple plant expansions with raw materials for DAP produce sourced from a Joint Venture of FFBL and OCP of Morocco in North Africa called Pakistan Moroc Phosphore.
Aiming for a target of 1.3 million tons of total production for the current year, with 650,000 tons of Granular Urea, and 650,000 tons of DAP, FFBL is expected to supply 42% of total DAP requirement of the country that has come down from 1.7 million tons of the outgoing year. Although a downward revision in forecasted demand of DAP for the current year was due to a macroeconomic scenario, FFBL has recently gone through a revamp of its production sites and IT for meeting higher production targets at a cost advantage in lieu of an upward revision of DAP demand.
According to Amir Ahsan, Chief Financial Officer at FFBL, an IT alignment that started in 2008 once the existing projects were taken care of, has laid the foundations of an integrated environment with the entire facility and the Head Quarters on LAN, WAN and BPN. Moving on from smaller IT deployments, FFBL joined hands with Abacus Consultants for a SAP Implementation organization-wide in 2009 with an expert team of 20-25 people put onto the project.
“A detailed analysis was carried out in order to determine why to go for the implementation and who to carry it out with. The determinants looked at included the local implementations, businesses opting for it in the future, projects handled by FFBL and the issues surrounding these”, according to Amir. After examining the scope of the project, SAP was selected amongst others due to its comprehensiveness and extent of integration as compared to its competitors.
As per Abacus, SAP Implementation in FFBL has been the largest in terms of its functionality.
Energizing Efficiency through the Organizational Machinery
From his early days at FFBL, Amir recalls the IT environment at FFBL to be ‘highly fragmented and manpower intensive, that had highlighted the need for an IT revamp at FFBL much before 2008. Organizations like such that are labor intensive, suffer from duplication, and a resistance to change that has to be overcome by restoring efficiency to the organizational machinery.
Partnering with Abacus for an organization-wide SAP Implementation of 11 modules that started in 2009, has completed an approximate of 8 implementations to date with 2-3 in the pipeline to be completed by 2011, Amir credits this accomplishment to a change-receptive organizational environment. In order to follow through with the implementation, the team consisting of the Human Resource of both FFBL and Abacus, was housed in a separate building that had earlier housed the Ammonia Revamp, and the DAP Revamp teams. Handling SAP implementation as a project of similar weight as capacity expansion, a cross-functional team of people put to work administered the implementation through all stages from documentation to knowledge-transfer.
SAP Modules implemented so far include Materials Management, Production Planning, Project Systems instilling efficiency in logistics and supply chain, Sales and Distribution, Quality Management and Finance and Controlling tying efficiency in cost control and inventory management, amongst others as of April 2010. Two modules that expect an implementation by early 2011 include Human Capital Management and Business Intelligence, extending efficiency to the decision-makers at the managerial level and above.
One of the biggest challenges for SAP Implementation at FFBL that went live in April, was to get the people used to the platform which is a work-in-process as is the case with every other organization going through such a massive change. As Amir puts it, ‘We had hick-ups as would be expected in any ERP Implementation, but those hick-ups weren’t as much as what we could have had’.
Although it is too soon for FFBL to point out any performance KPIs as the modules are still going through an implementation phase. As of now, Amir expects the time investment within every business process to shrink from 4 weeks in pre-SAP environment to 2 weeks in a post-SAP environment eliminating duplication of processes, task redundancy and wastage.
The Business and IT Alignment
‘As is the case with any ERP Implementation, a comprehensive evaluation has to be carried out followed by a team of credible key people put to the job and business people looking over the project from conception to completion.’ As Amir recalls, that was exactly how an ambitious organization-wide SAP Implementation was made possible.
With a Steering Committee and a Sub-Steering Committee in-charge of the implementation that met 12-13 times throughout the entire process, the project was rightly driven by ambitious deadlines. However, what deserves a special mention is the commitment and received the project received from the top management.
Rightly said, the project has been a business implementation and not an IT implementation at FFBL which is why the Project Manager put in-charge carried a business background and not an IT background. Such a decision was taken to ensure that that project executed met business goals, with IT providing the required support.
Establishing the Partner Connection
Post evaluation of the project needs and partner expectations, Abacus was chosen amongst others by FFBL and the choice was indeed worth the investment as proven ahead. ‘With the help of Abacus, some of the best engineers and finance people were put onto the team that liaised with everyone and became the focal point for their departments’, as Amir noted. Putting together an educated team eased the training process afterwards for the team and other users of the modules from the various domains.
While an HR base from both parties was pooled into the team, manpower sourcing was indeed the biggest challenge that had to be dealt with throughout the process. An increased employee turnover from the team was inevitable with better opportunities available to them now.
Against all odds, the implementation went through smoothly with only slight delays.
The Road Ahead
Claiming itself to be a growth-oriented organization, FFBL has managed to sustain its growth in the past quite well. In existence for merely a decade, FFBL has gone through various capacity enhancements and owns a subsidiary internationally.
On its way to finalizing the implementation with BI and HCM going live early next year, Amir is quite optimistic of the IT support brought to the business in pursuit of a continued growth on the road ahead.
Inflating operational efficiency foremost, SAP Implementation is expected to reduce the overall costs of business translating into higher margins with smaller cost/profit ratios within the next 2-5 years. Adding to it, Amir explained further that ‘an efficiency in both fixed costs, and wastage at the plant site and the Head Quarters are expected to translate into better margins’.
Taking an industry visual for an analysis of other players in competition with FFBL and their competence levels with respect to IT driving business, Amir reinstated how FFBL has been the first within its line of business to opt for SAP Implementation. A similar is soon to follow at its sister-concern, FFC. As FFBL is quite competitive in its marketing mix, it doesn’t expect a threat as such from the industry.
‘As FFBL and FFC hold a cumulative market share of 48-49% in DAP and 42% in Urea facilitated by the capacity expansions carried out earlier, FFBL’s target market is different from its competitors’, as Amir adds. Aiming to start projects in diversified fields, FFBL looks forward to edging business with qualitative analysis expanding bottom-line with reduction of cost and wastage.
- Name: Fauji Fertilizer Bin Qasim Limited (FFBL)
- Location: Port Qasim- Karachi, Pakistan (Plant Site); Rawalpindi, Pakistan (HQ)
- Industry: Fertilizer
- Products and Services: Manufacturing and Distribution of Granular Urea and Di-Ammonium Phosphate (DAP)
- Employees: 1500 approximately including the Management, Staff and contractual employees
- Website: www.ffbl.com.pk/profile.htm
- SAP Implementation Partner: Abacus Consulting
Challenges and Opportunities
- Employee Turnover
- A lack of familiarity with the platform’s usage
- An implementation driven by ambitious deadlines
- Greater efficiency in service
- Increased accountability, wastage and cost control in all business processes
- Stronger alignment between IT and Business strategies and roles
- Higher Profit Margins to facilitate project expansions in diversified fields
SAP Solutions and Services
- SAP ERP Financial and Controlling
- Human Capital Management (HCM)
- Material Management
- Production Planning
- Business Intelligence
- Sales & Distribution
- Project Systems
- Quality Management, among others
- Implementation of 8 modules went live by April 2010, spanning little over an year
- It was executed by a team of departmental experts brought together from Abacus and FFBL
- Implementation led by a non-IT Project Manager to ensure business objectivity
- Remaining 2-3 Modules expected to go live by early 2011 completing an organization-wide SAP ERP Implementation
- Completely integrated solution
- Depth and Breadth of Business Solutions Offered
- Comprehensive as compared to others
- High Availability of support and expertise
- Industry Best Practices available, which could be leveraged for enhanced efficiency and improving performance
- Successful track record verified by organizations that have opted for it, and that are considering it locally and internationally.
- Documented accountability of logistics for cost-containment
- Efficiency in Business Processes with reduction in time investment
- Availability of Qualitative Analysis for elevating profit margins