CHAPTER ± 1 Introduction of the Project 1.1: Concept & Significance

CHAPTER ± 1 Introduction of the Project

1.1: Concept & Significance of the Study

As governance and compliance has become a key part of any global enterprise KNPL has also sought to implement strict Governance models in line with its Japanese parent¶s mandate. The driving directive for the project came straight from the members and the users who wanted to see and practice strict controls on accountability and management in daily activities.

As the organization grew and volumes increased, these part manual and part computerized system could not cope up with the increased transactions. Requirement of a real time and essential data was felt by the Management for effective data management, material management and inventory control. The whole project has a very strong base in SAP.

Materials are key resources in an industrial enterprise since no production is possible without materials. Materials Management is a function responsibility for the co ordination of planning, sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to provide a pre decided service to the consumer at minimum cost. Materials Management is a term used to connote controlling the kind, amount, location, movement and timing of the various commodities used in and production by the industrial enterprise.

The project runs through a wide range of activities starting from material management module to authorization concept. Company is divided into various departments. Each department uses specific materials. One department cannot have the access to the materials of the other. So a datasheet of the same was made incorporating specification of who can have access to what material and from where. Also the units now revised are mostly in terms of kg/lb.

What is Master Data

Master data, which may include reference data, is information that is the key to the operation of business and is the primary focus of the Information Technology (IT) discipline of Master Data Management (MDM). This key business information may include data about customers, products, employees, materials, suppliers, etc. which often turns out to be non-transactional in nature. In this regard, master data can support transactional processes and operations, but its use is certainly not limited to such (analytics/reporting is another area greatly dependent on an organization's master data). Master data is often used by several functional groups and stored in different data systems across an organization and may or may not be referenced centrally; therefore, the possibility exists for duplicate and/or inaccurate master data. Thus Master Data is that persistent, non-transactional data that defines a business entity for which there is, or should be, an agreed upon view across the organization.

Impact of Master Data is shown below:-

Master Data to be used in implementation of SAP should be perfect. It should not contain redundant data. Hence to reduce the work of users, analysis is done. These tasks help the user to input less data. Work is completed fast and in less time. Also data becomes perfect and not obtained by repeated transactions.

Once the analysis is done users won¶t be able to enter wrong data. E.g. Out of five choices may be from the drop down menu (which are analysed in the task) user will input any one of them which will allow user to restrict entering wrong data. Data which is used in factories like NIPA is segregated in worksheet comprising all the scrap materials.

Accountability was one of the key focus areas in the project. Hence giving rise to the requirement of a role based authorization matrix with segregation of duties. This is a supplementary task which deals with the mitigation of access risk by creating a list of all the business processes and then correlating it with all the activities done at KNPL. Moreover after outlining the activities the same are correlated with the roles which are present in the system and as per the HR hierarchy.

What is SAP?

SAP is the leading ERP software package. SAP was the first to integrate a corporation's worldwide functions tightly into one application. SAP translated from its original German name, Systemanalyse und Programmentwicklung (Systems Analysis and Program Development) and renamed as Systems Applications and Products in Data Processing in 1977. Five former IBM programmers founded SAP AG one of the biggest European software company in Mannheim, Germany. The head office is in Walldorf, Germany. SAP was founded in 1972 and the first version of their software, SAP R/2, was released in 1979.SAP has evolved from SAP R/2 to SAP R/3 to my SAP solutions to SAP Business Suite. Its domination of the market occurred during the 1980s, expanding first throughout Europe (early 1980s) and then North America (1988). SAP R/3, an advanced, client-server based version of the popular R/2 product, was released in 1992 and sparked a stunning takeover of America's largest businesses. R stands for Real time. 3 stands for 3 tier architecture. SAP is both the name of the company and their ERP product

SAP system comprises of a number of fully integrated modules, which virtually covers every aspect of the business management. Using SAP's products, companies can now integrate their accounting, sales, distribution, manufacturing, planning, purchasing, human resources, analysis and other transactions into one application. SAP applications thus provide an environment where "transactions are synchronized throughout the entire systems."

With 56,000 installations serving 10 million users at 18,800 organizations in 120 countries across the globe, SAP ranks as the world's third-largest independent software provider.

So far, there have been 3 systems developed by SAP namely, R/1, R/2, R/3.

y SAP is an extremely complicated system where no one individual can understand all of it. y SAP runs on a fourth generation programming language called Advance Business Application Programming (ABAP). It has many of the features of other modern programming languages such as the familiar C, Visual Basic, and Power Builder. Your programs name conventions begins with a letter yxxx or zxxx. y SAP graphical user interfaces (SAPGUI) runs on Windows / NT / UNIX / AS400. When you are using 3.x you can used the SAPGUI 4.x, there are no conflicts as the SAPGUI is basically a front end tools. y If you create dialog screen, remembers to tick Development Tools (utility programs for the Screen Painter) when you are installing SAPGUI 4.x. y In SAPGUI 4.x, you can configure whether to use the present 3.x screen design or the New 4.x Visual design (which is very graphical and computer resource hungry). y Disable the login image to reduce the memory usage. In transaction SM30, table SSM_CUST; create a new entries with Name HIDE_START_IMAGE and Value to be set YES. y SAP have move towards the Windows Explorer Screen Format. y SAP is an enterprise resource planning (ERP) software product capable of integrating multiple business applications, with each application representing a specific business area. These applications update and process transactions in real time mode. It has the ability to be configured to meets the needs of the business.

Commands used in SAP :- MM01 Create MM02 Change MM03 Display

Ev l i of My SAP E P

E i Resource Pl i

ER i not new to t e market lace. In fact SAP created ERP over 0 years ago. 0 years ago t e private sector was looking to streamline t e business process, eliminate redundancy and frankly reduce t e number of systems required to run t e business.

ERP was t e answer. Many organi ations we able to significantly reduce systems, cycle time, reconciliation processes etc.

Wit ERP, we were able to reduce cost, simplify t e IT landscape, and most importantly impact t e operation of t e business. During t ose times, most organi ations were able to achieve headcount reduction, inventory reduction, reduction of close time etc.

In the late 80¶s and into the 90¶s companies started to embrace decision support. Many companies embraced the data warehouse concept. It was primarily used for reporting. SAP initially embedded many reports into our solution set.

Today, not only is operational excellence and decision support necessary to survive but we must do more. In fact, we must create value in order to survive and effectively compete. Today, organi ations are focused on business performance, collaboration and innovation. Technology can not only reduce cost but it can definitely impact the operation. ERP is part of the solution.

Total Company Value

Evolution of ERP

Business Strategy using SAP

New Maintenance Offerings Architecture Planning Custom Development Consulting System Integration Operations Planning & Optimization Hosting / Outsourcing

Benefits of my SAP ERP

SAP ERP delivers a comprehensive set of integrated, cross-functional business processes. With SAP ERP, we can gain the following benefits: Improve alignment of strategies and operations Improve productivity and insight Reduce costs through increased flexibility Support changing industry requirements Reduce risk Improve financial management and corporate governance Optimize IT spending Gain higher ROI faster Retain top performers Provide immediate access to enterprise information

Overview of Presentation & Database Servers

The presentation server is simply a GUI that is running at the user¶s workstation. It is a very light component, called as a thin client in common terminology. It is capable of sending requests to the application server, receiving the requests back and displaying the screen back to the user. Multiple instances of presentation servers can execute in the same work station.

And generally the presentation layers are, to a good extent, downward compatible with the application servers, in terms of the version. For e.g., a ³4.6 C´ version GUI would be able to communicate with a ³4.5 B´ version application server. The messages exchanged between the presentation layer and the application server is in a SAP proprietary format. The presentation layer is capable of accepting the screen information sent from the application server, format and generate the screens appropriately for the platform it is running on. The database server, as we saw earlier, acts as an interface between the application server and the RDBMS.As we know already, the R/3 system does not include the RDBMS. In other words, R/3 is independent of the RDBMS. R/3 is operational on a number of commercial RDBMSs. The vendor specific DB driver resides in the database server.

SAP R/3 Conceptual Areas

The R/3 system, as an application, is conceptually divided into 3 areas namely the application area, the basis area and the development area. This is in being synonymous to the 3 main types of users. Vi ., the application users or the end users, the admin users, popularly called as the basis people and the developers. The application area is where users initiate and execute transactions of the various functional areas of R/3 like Accounting, Human Resources and Logistics etc. The basis area is where the basis people or the admin users execute transactions that are used for monitoring the R/3 system like performance, database administration, scheduling etc. The development area is where tools and transactions are available for developers and programmers to create and test ABAP/4 programs. This is referred to as a developer¶s workbench.

Systems in R/3

Clients in R/3

SAP Module Functionalities

R/3's applications are modules. They can be used either alone or combined with other solutions. The integration capability of these applications increases the benefits derived for any company. Function modules are procedures that are defined in function groups. Function groups act as containers for function modules that logically belong together. A function module allows encapsulating and reusing global functions in the R/3 System. They are stored in a central library. The R/3 System contains a wide range of predefined function modules. Function modules also play an important role in database updates and in remote communications between R/3 Systems or between an R/3 System and a non-SAP system.

SAP is categorized into 3 core functional areas:

Logistics Sales and Distribution (SD) Material Management (MM) Warehouse Management (WM) Production Planning (PP) General Logistics (LO) Quality Management (QM) Financial Financial Accounting (FI) Controlling (CO) Enterprise Controlling (EC) Investment Management (IM) Treasury (TR) Human Resources Personnel Administration (PA) Personnel Development (PD)

SD - SALES & FI- FINANCIAL DISTRIBUTION ACCOUNTING

SD FI

MM-MATERIALS CO- CO CONTROLLING MANAGEMENT MM

AM AM-ASSET PP PP-PR ¡DUCTION MANAGEMENT PLANNING SAP

R/3 HR QM-QUALITY QM HR-HUMAN MANAGEMENT RESOURCES F PM PM-PLANT MAINTENANCE WF-WORKFLOW PS

M WM- PS-PROJECT WAREHOUSE SYSTEM MANAGEMENT

MM Module Materials Management

MM optimi es all purchasing processes with workflow-driven processing functions, enables automated supplier evaluation, lowers procurement and warehousing costs with accurate inventory and warehouse management, and integrates invoice verification. Supports Procurement Inventory Key elements

Materials procurement (purchasing) Inventory management Invoice verification

Material valuation Vendor evaluation External Services management Purchasing Information System (PurchIS) Inventory Controlling Information system

Material Purchasing Planning

Waste Inventory Management Control

Functions Of Materials Materials Management Store Economics Keeping

Disposal of Stores Surplus Mater. Accounting

Transportation

Below diagram shows How a Data is implemented in various ERP modules

1.2: Scope

The project undertaken in Kansai Nerolac Paints Limited (KNPL), LowerParel, Mumbai comprises duration of two months. The objective of the project is to standardize the master data for effective and efficient outputs to the user. I as a researcher did the analysis and segregation of data by talking to the users at KNPL and sort out materials, business roles according to KNPL business process activities which they undertake. This required a certain amount of understanding of the Business Process and a thorough understanding of the SAP Materials Management Module (MM module) and Authorization methodology. It also required communication to the KNPL SAP core team throughout the project activity. As the project outcome would be put into the SAP system hence I had to be thorough in the SAP concepts.

1.3: Objective of the Study

Obtaining effective, error free and non redundant Master Data Segregation of materials specifications and analyze the SAP-MM Module. Studying all the business processes and transactions being carried out in Material Management Department. Minimize maintenance efforts and provide User Friendly & Ergonomic System. Removal of Data Inconsistencies Provide effective and efficient Management Information System and flexibility of design for faster decision making Material Checks required by the Business processes (Better discipline over process) Segregation of Duties (SOD)

CHAPTER ± 2 Introduction to the Industry

The paint industry worldwide is classified into segments vi . decorative and industrial segment in India constitutes nearly 70% of the market whereas the scenario is just the reverse in the developed countries. Decorative Segment is dominated by the unorgani ed sector which now accounts for 70% of the total paint production. The unorgani ed sector has an advantage over the organi ed sector since it is fully exempted from the 0% excise duty and other government levies. In the organi ed sector Asian paints is the market share of 31% followed by Kansai Nerolac with a share of 16%.

Paint industry is characteri ed by low capacity utili ation as most of the companies get the work done on job work basis. This is because of the longer processing time requiredi n the paint industry when paint is manufactured in smaller batches the production falls. There is tremendous potential for the paints manufacturers in India because as against an average per capita consumption of paints in India is very less. Distribution channel plays an important role in the industry. Awareness and perception of specific brand is more important than the corporate brand equity. Asian Paints, the market leader has around 16,000 dealers in its network which are spread across the country. Kansai Nerolac comes second with around 11,000 dealers.

The paint industry is a raw material ± working capital intensive one with over 300 inputs

13 going into the manufacturing process. Half of these are petro based. Hence the industry's profit is sensitive to international price rises i.e. when the international prices of petrochemical products come down, the paints companies benefit and vice versa. The raw materials for paints may be classified into 5 segments-Pigments, solvents, binders, additives and white cement/urea and account for roughly 50% of total cost.

Pigments:

Pigments account for nearly one third of the total cost of paint production. Pigments are finely ground solids of different shades which are used to give color, consistency, durability and other properties to the paint. Titanium di oxide (TiO2) is a vital pigment is available in two grades: anatase and rutile. Of which the former is used in interiors while the latter is preferred for exteriors.

Solvents:

Solvents are volatile organic compounds (VOC) used to dissolve, suspend or change the physical properties of other materials. They are generally used to bring down the viscosity of paints to the desired level which also reduces the cost of paint formulation. Solvents constitute 70% to 75% of the paint liquid and ultimately escape into the atmosphere when the fluid dries. Solvents such as ethylene glycol and alcohols are finding wider use as co-solvents in new water borne formulations.

Binders:

Binders are generally oils, resins and plasticizers that give paint its protective property. Most resin manufacturers make alkyds, polyesters, emulsion polymers, epoxy resins, amino resins etc.

Additives:

Additives are added in small proportions to the paint to improve its performance characteristics in various ways. Skinning inhibitors, fungicides, wetting agents, driers etc are included in this category

The paint industry derives most of its revenue in the second half of the financial as this half coincide with the festival season in India. Also sales of automobiles in India is more in the second half in comparison to the first half. Rural market has emerged as the new segment for the players in the decorative market and most of the players have identified this segment as a thrust area and are launching new economy brands to cater to the need of this segment.

Comparative position of major players in the decorative segment of the paint industry

Premium Intermediate Economy Company Rank Rank Rank Brand Brand Brand Asian Apcolyite & Utsav & Royale 1 1 Paints Tractor Tractor Kansai Nerolac & Goody Allscape 4 Nerolac Nerocem Synthetic Berger Luxol 3 Rangoli 3 Butterfly 3 Paints ICI India Dulex 1 Maxilite 3

Trends in Decorative Paints

Increased Participation in Buying Process: Customer ready to Experiment -Involved customer -With unique finishes -High awareness levels -With style colors -Kids special

Per Capita Consumption still low as 1100 Grams Organi ¢ ed Retail: -Slow pace Service Critical: -Started in south -Color Dispensing Machine -International companies trying it as an -Application Service alternative model -Influencers support

Trends in Industrial Paints

The Industrial segment is dominated by the organi ed sector due to being highly technologically oriented. The Indian cost of production is 4 percent more expensive than the

15 international cost. The industrial paints segment has grown at a cumulative growth of more than 20% over the last 4 years owing to tremendous growth achieved by the Indian automobile sector. However the current scenario is not very encouraging as the Indian Heavy motor vehicles, Light motor vehicle and the premium car market is facing demand recession. In fact, Indian majors like Asian paints and Kansai Nerolac have embarked on hectic R&D to face the competition and also reduce their cost of production. Industrial segment is also the more profitable segment of the industry as compared to decorative paints due to value addition in the form of specialized functions that these paints perform.

The Rs 5,200 million industrial paint markets are split into five segments:

Automotive coatings High performance coatings Marine paints Powder coatings Coil coatings.

Automotive coatings for 2 wheelers and 4 wheelers constitute nearly 50%of the market where Kansai Nerolac is the leader. The automotive refinishes segment has emerged as a potential segment in the Industrial paint sector. This 5 million litres segment is expected to grow at a rate of 25% per annum if the Indian automobile segment continues to grow at a rate of 15 %.

Before the entry of Maruti, the industrial paint market was sluggish as Hindustan Motors and Premier Automobiles were preoccupied with cost of the paint and not the quality. Maruti set stringent customer service standards by laying emphasis on glossy finish and rust free body. Kansai Nerolac was first to seize this opportunity and entered into collaboration with Kansai paints which was the largest supplier of paints to Suzuki in Japan. Thus in one stroke it was able to control the entire Maruti's business. Thus by ridding piggy back on Maruti, in a few years time Goodlass (Kansai Nerolac) become the market leader. This promoted other auto manufacturers viz Bajaj Auto, Mahindra & Mahindra, Kinectic Honda and Telco to switch to Nerolac because of superior technology and glossy finish it gave to the automobile. Sensing the growth potential of this industry, Asian paint entered into collaboration with PPG of America and was able to gain contracts from Daewoo & General Motors for their premium range of cars. Maruti Suzuki, Toyota Kirloskar, Honda Siel, General Motors, Tata Motors, Mahindra & Mahindra, Renault, Fiat, Hindustan Motors (Mitsubishi), Renault Nissan, Hero Honda, Yamaha, TVS Motors, Bajaj Auto, Honda Motorcycle & Scooters, Suzuki Motorcycle , Volvo India, Ashok Leyland, TAFE, Eicher Motors, TACO, Motherson Auto, Visteon, Wheels India, Reliance Petroleum etc. Jenson and Nicholson have also tied up with Herbert¶s GMBH of Germany to manufacture automotive refinishes.

High performance coatings are used in plants for fertilizers, petrochemicals and offshore oil installation where anti corrosive protection is very essential and this market is shared amongst Asian Paints, Kansai Nerolac and Berger paints. This segment accounts for nearly 16% of the industrial paint market. Powder coatings for white goods have a 10% market share of the industrial paint market. Marine paint accounts for 8% and other special purpose paints account for nearly 16%.

CHAPTER ± 3 Introduction to the Company: Kansai Nerolac Paints Limited

3.1 About Kansai Nerolac

Kansai is one of the top paint companies in the world. It has 39 Joint Ventures, subsidiaries and licensees around the world and has recorded a turnover of over 2 billion USD. Kansai Nerolac Paints was at first known as Goodlass Nerolac Paints. The Kansai Nerolac Paints Ltd produces various kinds of products that range from industrial sophisticated coatings for the industries to architectural coatings for hospitals, homes, and offices.

Evolution of Kansai Nerolac Paints:

1920: The Company started its journey as Gahagan Paints and Varnish Co. Ltd at Lower Parel in Mumbai.

1957: Goodlass Wall Pvt. Ltd grew popular as Goodlass Nerolac Paints (Pvt) Ltd. Also, it went public in the same year and established itself as Goodlass Nerolac Paints Ltd.

1976: Goodlass Nerolac Paints Ltd. became a part of the Tata Forbes Group on acquisition of a part of the foreign shareholdings by Forbes Gokak.

1983: Goodlass Nerolac Paints Ltd. strengthened itself by entering in technical collaboration agreements with Kansai Paint Co. Ltd, Japan and Nihon Tokushu Tokyo Co. Ltd, Japan.

1999: Kansai Paint Co. Ltd, Japan the number one paint company in Japan took over the entire stake of Tata Forbes group and thus GNP became wholly owned subsidiary of Kansai Paint Company Ltd.

2006: On the 11 th of July, Goodlass Paints Ltd renamed as Kansai Nerolac Paints Ltd.

Kansai Nerolac Paints Company has manufacturing units situated in Vatva (Gujarat), Lote Parshuram (Chiplun), Jainpur (Uttar Pradesh), Bawal (Gurgaon), and Hosur (Tamil Nadu). The total production capacity of the plants of the company is around 161,100 TPA and all the plants are technologically advanced and comparable to most state-of-the-art plants in the world. Kansai Nerolac Paints is divided into 8 divisions all over India and has a very wide network of more than 11,000 dealers spread all over the country.

Kansai Nerolac Paints is a market leader in the sector of automotive segment where it supplies more than 90% of the required original equipment. Kansai Nerolac Paints is

17 the nd biggest company in the coating sector in India where it has more than a 0% market share. The company has entered into collaboration with Oshima Kogya Company, Japan and E.I. Du-Pont de Nemours & Company Inc., USA for the manufacture of various innovative items and a brand new product line. The total income of the Kansai Nerolac Paints Company amounted to Rs. 732.9 million in 2005-2006 which shot up to Rs. 3270 million by 2006-2007. The net profit of the company amounted to Rs. 271.00 million in 2005-2006 and the next year the net profit of the company increased to Rs. 324.7 million.

Kansai Nerolac Paints prides itself on its organi ational strengths such as its values, vision, R&D, experience, strategic alliances, marketing skills, and its extensive distribution network. The various plants of Kansai Nerolac Paints have been certified by agencies such as BVQI and Intertek, ISO 14000, ISO 9000 2000, OHSAS 18000 are just some of the certifications that Kansai Nerolac Paints has received for its efficiencies in work processes and standards.

Kansai Nerolac Paints has become one of the topmost companies in the coating sector in India due to its quality of products which are the best in the market. The company has a presence in several Indian states such as West Bengal, Assam, Gujarat, Haryana, U.P, M.P, and Maharashtra. Kansai Nerolac Paints is headed by Mr. Jamshed J. Irani who is the chairman of the company. Mr. Harishchandra Bharukha is the managing director of Kansai Nerolac Paints which employs more than 2000 people.

Future Scope of KNPL

Housing, Construction, Growth driven by Companies with high Agriculture growth, emulsions- emulsions share to total sale, will have higher Disposable Income, in excess of 25 % growth Drivers Business

3.2 Nerolac¶s Information technology Initiatives

Nerolac has always sought to harness the benefits of Information technology. It has envisioned using Information technology in all areas of business to build up unique competencies and efficiencies thus delivering maximum value to Nerolac's stakeholders.

Starting in February 2000, it has transformed its functional based legacy systems into a process based organi ation wide systems culture by investing and implementing the SAP R/3 solution. Nerolac has always followed robust Information technology roadmap and during last decade implemented core SAP application like SAP R/3, SAP Supply Chain, SAP Business intelligence and supported portals like Dealer portals, Vendor portals etc.Kansai Nerolac Paints Limited (KNPL) has contracted PricewaterhouseCoopers India Limited (PwC) for implementing and upgrading various modules of SAP. During the current year Nerolac has upgraded all existing core SAP application to the latest version and staredt implementation of cutting edge new SAP applications in the area of Finance , Marketing and Customer Relationship , Manufacturing , Corporate Governance , Business Analytics , Mobile and Vendor portals etc.

As part of these implementations Nerolac today has a state of the art data center with ISO 27001 certification and communication infrastructure based on MPLS VPN , Leased lines and VSAT connecting all its sales offices and factories around the country allowing rea-ltime transaction processing backed by a state of the art Storage (SAN) device.

Nerolac SAP

SAP Implementation is the whole of processes that defines a complete method to implement SAP software in an organi ation. The SAP implementation process is made up out of four main phases, i.e. the project preparation where a vision of the future-state of the SAP solution is being created, a si ing and blueprinting phase where the solution stack is created and training is being performed, a functional development phase and finally a final preparation phase, when the last tests are being performed before the system goes live. For each phase, the vital activities are addressed and the deliverables/products are explained.

Nerolac at present:

Where are we

SAP R/3 4.7

SAP BI 3.5 SD SAP AP O MM /PM 4.1 PP QM O FIC PS RO LES (Concurrent)

HR, Sales Portal, Vendor Portal, Knowledge Management, IT CRM etc.

Non SAP Applications

Infrastructure (Servers + Storage+ Network)

Where we will be?

Where we will be Where we are

SAP SAP ECC 6.0

SAP R3 4.7 + APO 4.1 + BO 3.5 SAP NEW GENERATION APPLICATIONS

SAP APO 7.0 PI SOLMAN

Non SAP Applications

SAP PARTNER APPLICATIONS NON SAP APPLICATIONS SUPPLIER PORTAL HRIS Need for change:

EOL ( End of life ) and support for existing SAP applications version Need to consolidate entire non SAP application under one roof To make organization future ready and gain competitive advantage To get differentiation and improved visibility at market place Strong corporate and brand image Create more entry barriers for new entrants Redefine business processes for better market response To improve employee pride and productivity Foster culture of innovation Strong corporate governance and compliance

What are we implementing? Implemented modules of SAP

ECC 6.0 New General Applications

Existing ERP New GL MII SD GRC MM/PM PLM WM FSCM PP CRM QM DMS TDMS FICO KM PS BI Adobe BO ROLES WF EP (User based)

Enhanced APO 7.0 PI SOLMAN Functionality

Revamped Infrastructure (Servers + Storage + Network)

3.3 COMPETITORS

INDIA: Asian Paints, Berger Paints, ICI

INTERNATIONAL: Herbert¶s GmbH- Germany, Jenson and Nicholson, PPG

3.4 Nerolac¶s Vision and Values

To leverage global technology, for serving our customers with superior coating systems built on innovative and superior products and world class solutions, to strengthen our leadership in Industrial coatings and propel for leadership in Architectural coatings, all to the delight of our stakeholders.

Values

Innovation

Entrepreneurial

Responsive

Simplicity

Team Orientation

3.5 Awards and Achievements:

While we look to the future, it is important to bask in past glory. Nerolac has won many accolades for its stupendous work in product development, environmental consciousness and in being a responsible corporate citizen.

y 'Golden Peacock Environment Management Award 2005' for environment management of Jainpur factory & DSIR National Award ± ACED for adaptation of technology to suit local needs. y Short listed for the µBest Managed Company¶ award from Business Today & A.T. Kearney 2005. y Best Vendor Award from customers like Toyota Kirloskar Motors (TKML) for Cost & from Maruti Udyog (MUL) on overall commendation. y Awards for Marketing initiatives like Cannes2007 Bronze for press Ad y Emvies 2007 Gold & Silver for Best Media innovation, Best case study-Media innovation(Impression Rang Zamade), Best Integrated Campaign. y Reader¶s Digest Trusted Brands Gold Award for 2008 y Frost & Sullivan Market Leadership Award in Indian Industrial Paints & Coating Market y µHall of Fame¶ from CTO Forum, PC Quest & Best Implementation-APO in IT y Excellence in Corporate Governance from ICSI y Greentech Environment Excellence Gold & Silver for Bawal & Chennai units y Association of Business Communicators of India, Silver for Annual Environment Report. y Environmental Excellence Gold Award by Greentech Foundation for the Lote Plant for the year 08-09. y Nerolac Beauty Flexi won Product of the year award (2008-09) in the paint category.

CHAPTER ± 4 Methodology

4.1 Project Formulation and E ecution Strategy

& Analysis Quality Assurance C Preparation Conception Implementation & Testing utover

Preparation:

The primary focus is to get project started, identify the team members and developing a high level plan and gathering the required information using SAP transactions. Analysis & Conception:

The purpose of this step is to understand the business goals and business requirements needed to support these goals Identify required and important data (materials). Determine task profiles based on the organi ation chart and a business process analysis. Check if SAP role templates can be used. Specify relevant applications functions (transactions, reports, and Web links) to the data (materials). Identify required roles. Specify if the roles are higher-level roles or specific roles that are, if they are subject to any restrictions resulting from organi ational or application-specific control mechanisms. Identify required composite and individual roles for implementing the roles and the authori ation concept.

Implementation ± to be done by SAP Basis:

The purpose of this step is to implement all the business and process requirements and customi e the system into various proposed modules under SAP.

Quality assurance & tests ± To be done by End users

The purpose of this step is to complete testing, end user training, system management and cutover activities (steps or activities in a project carried out just prior to the project Go-Live). Critical open issues are resolved. After this one would be able to run the system into productive R/3 system. However quality assurance and tests and cutover activities were not in the scope of my project.

4.2 Material Master Management

Master data

Master data is a term for main reference files of information such as the material master file. Master data records remain in the database for an extended period of time. Master data is shared across application modules in R/3. Master data is obsolete and can be archived.

Material Master

The material master represents the central source for releasing material-specific data like raw materials, supplies, expendables, semi-finished goods, products, production resources and tools. The material master contains all the information on all the material that a company procures produces, stores and sells. It is used by all of the SAP components in the R/3 System. The material master record is the reference point for further objects that are relevant to the variant product. Bills of material, routings, and so on are all created for this material. The material master record contains important control parameters, which especially affect material requirements planning (MRP) and sales. Material master records are also referred to as materials and part masters. The material master data is used by various business areas: Purchasing Inventory management Production planning Production order execution and control

Views for Material Master Maintenance

FFFF Each department has its own view on a material master record. At least one view must exist at the plant level. For example, data that relates to the accounting department is stored in the accounting view and data that relates to material planning is stored in the MRP view. A view can extend to one or more screens. For example, the MRP view has several screens. The user-specific material master allows you to tailor the data to meet your specific requirements. User can define a default setting for the view, the industry, and the organizational levels. The views highlighted have particular importance affecting the material¶s processing.

HAT IS A CONFIGURABLE MATERIAL? A configurable material (standard product, in earlier releases) is the material number under which all variants of a product are stored in the R/3 System. Material It is the material number under which all variants of a product are stored in the R/3 System. It is the reference point for related objects (bill of material, routing, and so on). It sets important control parameters, especially for MRP, pricing, and sales.

ILLUSTRATION

Basic Data indicates if the material is configurable; MRP sets planning parameters; Sales identifies the item category group and general item category group; Work Scheduling sets the order change profile; and the Classification view can be used for class and characteristic assignments. In the standard R/3 system, material type ZADD is defined for configurable materials. However, user can create your own material types for configurable materials. User can define a material as configurable if the material has a non-configurable material type, by setting the indicator on the Basic Data screen. Before user can configure a material, the material master record must have the material is configurable indicator selected in its Basic Data view.

User can create a material using a material type that has the configurable indicator defined in customizing. This means that all materials created with this material type are configurable. In the standard R/3 system, material type ZADD is defined for this purpose. User can define individual materials of other material types as configurable. To do this, set the Material is configurable indicator in the Basic Data view of the material.

User must define the following settings in the material master of a configurable material: In the sales data, user can enter the item category group or the general item category group. The item category group controls the assignment of item categories in sales orders. The item category of an item influences the transfer of requirements and pricing for the item.

In the MRP data, user enters an MRP group or a strategy group. The strategy group determines the planning strategy for the configurable material (for example, make-to- order production). The MRP type determines whether and how the material is planned (for example, using planned orders). The lot size determines the lot-size procedure that the system uses to calculate the quantity of the material to be produced. A configurable material needs exact lot sizes. The Individual/Collective Indicator controls whether separate segments for requirements for the configurable material are created in the MRP requirement explosion. To enable availability checks for the material and its components, enter a Check Rule. The default Check Rule for a configurable material is 02.To enable order change management defines the profile in the work scheduling view.

Integrating all of the material data in one single database object means that the problem of data redundancy is not an issue. The stored data can be used by all areas, such as purchasing, inventory management, materials planning, invoice verification, and so on.

Documents are captured and stored on R/3 with various amounts of information. Examples: Material Documents, Accounting Documents Output is any type of communication of data. Types of output: file, Fax, Email, Printout, Screen Reports/Lists are information that is derived from a source and presented to the user in some output type. User can generate reports directly from the online transactions or from the other sources of summarized data such as the Business Information Warehouse, Executive Information System or the various module Information Systems. Detail Transaction information is stored on the R/3 system and summarized data is typically stored on the BW, EIS or Information System for detailed summarized analysis using the tools provided by those systems. During integration, the data is stored without redundancies.

4.3 Authorization Management

The ERP system being used at KNPL is SAP hence every outcome had to be such that it could be implementable in SAP. A thorough grip on the SAP authorization methodology

26 which is done using the transaction code SE16 was essential. This section contains the methodology to be used for giving authorizations in SAP. As the SAP system uses the authorization objects to control access to business objects and in turn business related data. A thorough grounding was needed in the SAP authorization methodology so that the output generated could be successfully implemented in SAP. Without which the whole exercise would be wasted.

Segregation of Duties

Under growing pressure of various regulatory standards and measures issued by different government, it is clear that there should be properly defined access controls which are implemented effectively. Access Control, ensures that there is proper segregation of duties meaning that the right person has access to the right data. Sod or Segregation of Duties is an important factor while dealing with different responsibilities and job profiles across an enterprise.

Across an enterprise there are various functions and these functions are performed, together by a set of roles/responsibilities. Sod says that these set of Roles/responsibilities should be assigned in such a way that, across an enterprise, any individual should not have end to end access rights over any function. The roles and responsibilities for the function should be divided in such a way that one person does not have full right over the function that the risk of malicious activity of manipulation of the function is reduced. The more critical the function is, greater and clearer Segregation of Duties should be.

Segregation of Duties deals with access controls. Access Control ensures that one individual should not have access to two or more than two incompatible duties. Some examples of incompatible duties are: y Creating vendor and initiate payment to him. y Creating invoices and modifying them. y Processing inventory, and posting payment. y Receiving Checks and writing pay-offs.

Ideally, single individual must not have authority of creation, modification, reviewing and deletion for any transaction / tasks / resources. If any individual has access rights to creation and modification, he can create and after getting it reviewed, he can modify it to do some fraudulent exercises. Similarly if an individual has creation and deletion rights he can create, initiate payment and later delete any transaction logs that can track his activity.

Segregation of Duties ensures that: y There are no errors, as Sod ensures cross check of roles/responsibilities. y Risk of Fraud is reduced as fraud will involve two or more than two individuals. y Clear separation of Roles/Responsibilities across various functions in organization.

Segregation of Duties must be so performed that it reduces the risk associated with a function/process that can be mal-functioned to practice any fraudulent exercises. If proper SoD does not exist in an organi ation, then:

y There are ineffective internal access controls. y There is improper use of materials, money, financial assets and resources. y Estimation of financial condition may be wrong. y Financial documents produced for audits and review may be incorrect.

There are circumstances where proper Segregation of Duties cannot be implemented. In such cases there should be a mitigating control designed in order to keep a check on the unresolved SoD. For Example, if in case it is necessary, under some circumstances that an individual must have creation and modification rights then there should be a mitigating control designed to keep a track over the individual¶s activities. For example, there could be a mitigating control that could keep a check on database that is where his creation and modification transactional data is saved, or may be a review of transactional logs can be a mitigating control. The assignment of authori ations should be structured in a way that is clear for the administrator, by using a smaller number of roles. If this is not done, it is often difficult to remove undesired obstructions to business processes in complex, nested authori ations. Only with a transparent structure can this be avoided. If problems occur nevertheless, it is only in that the places to be maintained can be found. The business functions and business processes have been analyzed to enlist the activities as per the function. These activities have been listed as per the roles played by the end users in short activities have been bunched according to the roles. There on the roles have been allocated as per the SBUs and the business functions. A diagrammatic representation of the process can be seen as below. Theassoc iated datasheets are shown in the further chapters.

Business Functions

£ £ £ M£ teri ls M n ge ent

Activities

Purch£ sing

Design£ tions or Positions

£ £

Purch£ se M n ger £

Authoriz£ tions & En blers

£ £ £ Purch£ se M n ger pl nt 1000

Roles

Alloc£te Roles to the end user according to their SBU. F am B a 1000 or ex ple uyer pl nt

CHAPTER ± 5 Data Analysis and Interpretation

5.1 Organi ational Levels

Fig: Levels of the Organi ation

Client

The highest-level element of all organizational units is the client. The client can be an enterprise group with several subsidiaries.

Company Code

A company code is an independent accounting unit. Each company code contains a balanced set of books. A company code therefore does not extend over national boundaries.

Plant

A plant is an organizational unit that subdivides an enterprise according to production, procurement, maintenance or materials planning. It is a place where materials are produced or goods and services are provided. A plant also has the following in R/3: An address A language A country assignment A workday calendar

Factory

A factory is a manufacturing plant or an industrial building where laborers manufacture goods from raw materials or supervise machines processing one product into another with the

29 help of machinery. Typically, factories gather and concentrate resources: laborers, capital and plant

Storage Locations

A storage location identifies where material is stored. One or more storage locations can be assigned to a plant.

BSR

A Basic storage location identifies where finished goods are stored.

Warehouse

A warehouse is a commercial building for storage of goods.

Depot

A depot is a deposit, astorehouse or a stock point from where retail dealers pick up their stock requirments.

Distribution system

A distribution system is the system of intermediaries between the producer of goods and/or services and the final users.

RDC

A Regional Distribution Center (RDC) is a collection and consolidation center for finished goods produced by its own group of companies